We never called for the IT framework to be abandoned - IEA

Inflation targeting framework not effective, IEA

We can't abandon IT,BoG

BoG revises MPR

The Institute of Economic Affairs has stated that it did not call for the abandonment of the inflation-targeting framework instead it only stated that it was not effective.

In a statement, the IEA said, “contrary to some of the reports circulating around, the IEA never called for the IT framework to be abandoned. The IEA only said that the framework is less effective in the Ghanaian context where transmission of the PR impulses is slow and inflation has strong supply and cost undercurrents.”

The Institute explained that it only called for a more comprehensive approach, whereby the IT framework would be complemented with interventions directly targeting the entrenched supply and cost factors.

The Governor of the Bank of Ghana during the press conference announce the monetary policy rate noted that the IT has served the country well in contributing to bringing inflation down from the high levels during the pre-IT period.

This, according to the Governor, had prompted the BoG to consider lowering its inflation target of (8+/-2) % at some point.

But the IEA said, even though it recognizes that inflation has been brought down progressively under IT, it has to be noted that, along with inflation, almost all key macroeconomic indicators have improved during the period in question, in line with the generally improved macroeconomic management of the economy.

“Regarding the inflation target, it is the case that the (8+/-2)% has been in place almost forever, which, in a way, seems to suggest a lack of sufficient ambition on the part of the MPC to lower inflation further to levels comparable to those of Ghana's peers or trading partners.”