Alhassan Andani: Economy unresponsive to policy rate hikes
Former Managing Director of Stanbic Bank Ghana, Alhassan Andani, has said the economy is not responding to monetary policy rate hikes by the Central Bank.
According to him, recent policy rate hikes by the Central Bank have not yielded the targeted results of bringing inflation rate down, hence the apex bank should review its decisions to further increase the policy rate.
“The economy is not responding, and maybe the time has come for the Bank of Ghana to review its stance, I don’t think that real sector is responding to the monetary policy rate hikes”, he said.
He remarked that in markets where policy rates are responsive, changes in the rate quickly send signals for adjustments in the market.
“In markets whether there is correlation between the real sector and monetary, yes then policy rate should be increase”, he added.
The Monetary Policy Committee of the Bank of Ghana on March 21, 2022 increased the policy rate to 17 percent.
On May 23, 2022 the policy rate was increased by 200 basis points to 19 percent, while it was kept unchanged on July 25, 2022.
The rate was increased again, to 22 percent on August 17, 2022.
The Bank of Ghana has argued that the policy rate hikes were needed to help check demand driven inflation.
Justifying the increases, the Monetary Policy Committee argued that the increases were needed to control the general price levels of goods and services.
The World Bank Country Director, Pierre Laporte recently warned that, inflation rate could have been worse if the Bank of Ghana had not been consistent with the policy rate hikes.
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