The Bank of Ghana has reiterated its assertion that the inflation targeting mechanism is the most effective monetary policy formulation strategy to help to drive inflation down.
This comes despite concerns by some experts that the IT framework had outlived its usefulness and cannot be effective against price pressures.
Speaking at the launch of the book titled “Central Banking in Ghana and the Governors (Institutional Growth and Economic Development)”, First deputy Governor of the Bank of Ghana, Dr. Maxwell Opoku-Afari stated that, “I found the author’s exposition on the tools of monetary policy insightful, especially the direct control and inflation targeting, expansionary and contractionary monetary policy stance and contemporary monetary strategies.
“In all of these narratives, inflation targeting is deemed the most robust monetary policy formulation strategy that has impacted positively on the objectives of central banks, including the Bank of Ghana,” he said.
In 2007, the Bank of Ghana adopted an inflation targeting (IT) framework, which was supported by a flexible exchange rate regime.
Inflation targeting is a monetary policy framework where the central bank sets a specific target for the inflation rate and adjusts its monetary policy tools to achieve that target.
The primary goal of inflation targeting is to maintain price stability, which is considered a crucial prerequisite for sustainable economic growth and development.
The Bank of Ghana’s inflation target was set at 8% with a symmetric band of 2%, which means that the bank aimed to keep inflation within a range of 6% to 10%.