Economist Professor Godfred Bokpin has impressed on the Bank of Ghana (BoG) on the need to reduce the policy rate even as the Monetary Policy Committee (MPC) announces a new rate today.
Professor Bokpin explains to Citi Business News a decline in the policy rate by at least 200 basis points will relieve businesses of their current plight and reflect government’s reassurance that Ghana is open for business.
“Looking at inflation that is about 15 percent, I think any reduction between 200 and 500 basis points will be ideal,” he stated.
The MPC led by the Governor, Dr. Abdul Nashir Issahaku at its last meeting in November last year, reduced the prime rate by 50 basis points to 25.5 percent.
But the economist maintains a further reduction is possible with recent signals such as a drop in inflation.
“If the government says they are pursuing growth and employment creation, then the policy rate will have to be reduced.”
Meanwhile the economist has ruled out any significant impact of the change in government on the operations of the Monetary Policy Committee of the Bank of Ghana.
Per the regulations governing the Central Bank, the Governor of the central bank is the Chairman of the MPC.
Even though conventionally, governors exit with outgoing governments, the NPP government is yet to outline its plan for the central bank.
But Economist Professor Godfred Bokpin tells Citi Business News the independence of the BoG should not affected by the change in government.
“To a large extent, the Bank of Ghana’s regulations make the central bank independent and for that reason a change in government necessarily should not create a problem for the economy… largely Monetary Policy seeks to complement the government’s fiscal policies in addressing the developmental challenges of the country,” Professor Godfred Bokpin stated.
By: Pius Amihere Eduku/citibusinessnews.com/Ghana