The Bank of Ghana’s attention has been drawn to a recent article published on JOY FM online platform (myjoyonline.com) with the caption: “Bank of Ghana has lost focus”, and which has since been republished by other media houses and circulated widely on social media.
In the said article, Togbe Afede XIV is reported to have raised several issues about the Bank of Ghana’s conduct of monetary policy and its governance structure. While the Bank of Ghana rarely comments on general media discussions with the understanding that different stakeholders will have different views on the conduct of monetary policy, and also has a strong commitment not to be distracted by such discussions but rather remain focused on its primary mandate of controlling inflation, we have found it very important to respond to the facts (or the lack thereof) in the said article, in particular, given the profile of Togbe Afede XIV in the society.
To begin addressing the issues he raised, we will put in perspective where we have come from as far as macroeconomic management is concerned. Achieving and maintaining macroeconomic stability has been one of the major challenges to public policymaking in Ghana. Its evolution is intertwined with the development history of Ghana. More recently, the current Management of the Bank of Ghana has worked very closely with other key stakeholders to achieve significant stability in the last four (4) years. Inflation which was 15.4 percent at the end of 2016 was brought down significantly to 7.9 percent in 2019, until the disinflation process was dislodged with the onset of the covid pandemic, which saw inflation rising again in 2020 and currently estimated at 12.2 percent at the end of November 2021.
The gains from this disinflation process have been passed on to the market as the Central Bank reduced the Monetary Policy Rate, which stood at 25.5 percent at the end of 2016 to 13.5 percent at September 2021, and lending rates have dropped from 28.1 percent at the end of 2016 to 20.2 percent at the end of September 2021. This was only raised recently by 100 basis points in November 2021 to address rising underlying inflationary pressures which was becoming embedded. In the process, we have seen growth rebound strongly in the last four years. The ultimate impact has been a relatively stable currency in the last four years, a stability that has not been observed in the […]
