Private sector businesses and economists want the Bank of Ghana to review its stance in pegging the policy rate at 25.5 percent in January 2017.
They argue that the development is less likely to compel commercial banks to adjust their respective rates on loans and advances to customers.
The Monetary Policy Committee of the central bank in its first meeting for 2017 kept the policy rate unchanged at 25.5 percent.
Governor of the Central Bank, Dr. Abdul Nashiru Issahaku cited concerns over inflation outlook and exchange rate volatility.
But reacting to the position, Economist Professor Godfred Bokpin described the BoG’s decision as a clear indication of the central bank’s pessimism of the performance of the economy.
“I think that looking at the stance that the MPC has taken over the last couple of months, it is not surprising because they seem to be a bit more pessimistic about the economy than the other data seem to suggest and for which reason they have decided to keep the policy rate at 25.5%.” he said.
According to him, prevailing economic conditions such as a drop in inflation should have prompted a drop in the policy rate to ease cost of accessing credit by businesses.
“Ideally, if they had reduced it even marginally, it would have been consistent with what we are observing. But I think that with the new government and the goodwill, I want to believe that we are better positioned to be able to contain the threat of inflation better than we have seen in the time past and therefore the inflation expectation would not be that high.”
Meanwhile the Private Enterprise Federation has insisted that the rate is still high.
The CEO of the Federation, Nana Osei Bonsu explains that the figure must be reviewed downwards to support private sector growth.
“For the policy rate, I think it is misguided; uncalled for and it should be reviewed in prudent manner where it allows private sector to get the liquidity to do their investments.”
By: Jessica Ayorkor Aryee and Pius Amihere Eduku/citibusinessnews.com/Ghana