BoG Gold Coin Intervention Insufficient to Tackle Inflation – Dr Theo Acheampong
Economist and Political Risk Analyst, Dr Theo Acheampong, has noted that the introduction of the Ghana Gold Coin (GGC) will not significantly impact inflation to drive down the country’s high inflationary rate.
Making the assertion in an interview on Thursday, October 3, 2024, Dr Acheampong averred the introduction of the GGC which is a monetary policy measure by the Central Bank is a ‘miniscule intervention’ in comparison to the scale of inflationary pressures driving the country’s inflation.
“The intervention that the central bank is trying to do with this new gold coin is one of several other monetary policy moves. So I think the idea is that instead of buying and holding dollars, you could buy a gold coin and then sell off the gold or hold on to it. But it does not fundamentally solve the problem of inflation.
“It’s a minuscule intervention relative to the scale of the problem because of the inflation expectations, for many citizens, for many businesses, they would prefer to hold on to the dollar because they see that as a source of safety and a retainer of asset value,” he quipped.
“So I don’t think that the gold coin that the central bank has introduced, would fundamentally tip the needle that much when it comes to bringing down inflation,” he added.
Year-on-year inflation rose to 21.5% in September 2024, up from 20.4% in August, according to data from the Ghana Statistical Service.
This marks the first uptick after five consecutive months of declining inflation, driven largely by a sharp rise in food prices.
Food inflation surged to 22.1% in September from 19.1% the previous month, outpacing the overall inflation rate. In contrast, non-food inflation eased slightly, falling to 20.9% from 21.5% in August.
Both imported and domestically produced goods contributed to the inflationary pressures. Inflation on imported items climbed to 17.0% up from 6.1% in August, while locally produced goods saw an inflation rate of 23.4%, rising from 22.2%.
The launch of the Ghana Gold Coin (GGC) according to the Central Bank is aimed at deepening the country’s financial markets and providing citizens with a novel investment opportunity.
The GGC, available in denominations of 1 oz, 1/2 oz, and 1/4 oz, is manufactured from 99.99% pure gold sourced from responsibly mined deposits within Ghana.
The introduction of the GGC the BoG asserts, serves multiple purposes but primarily it allows the central bank to manage liquidity more effectively by mopping up excess cedi in the banking sector.
Adding that, the tool will complement existing monetary policy instruments such as Bank of Ghana Bills and overnight deposits in open market operations.
“This initiative is a testament to our unwavering commitment to deepen financial markets by offering other avenues for savers to invest,” Dr. Addison stated during the launch event of the GGC on the sidelines of the 120th MPC Press Briefing.
