BoG has no alternative but to hike policy rate – Terkper
Erstwhile Minister for Finance, Seth Terkper, says he expects the Central Bank to once again up its monetary policy rate in light of the recent jump in the country’s inflation rate.
According to the former Finance Minister, the apex bank has no alternative but to hike the policy rate from the current 17 percentage points.
“I expect the policy rate to go up because really I don’t see any alternative for the Central Bank,” he told journalists on Friday, May 13, 2022.
A higher policy rate implies higher cost of borrowing for businesses and individuals from the commercial banks in the country.
It also implies higher interest costs for government to borrow from the domestic market through the issuance of debt securities particularly the short-term securities such as the 91, 182 and 364 days treasury bills.
Asked if he would be surprised if the Central Bank decides to maintain the policy rate at the current level despite the surge in inflation rate, Mr Terkper noted that he would want to know the ‘technical reasons’ for which the apex bank will maintain the policy rate.
“I will check the technical reasons for the BoG not increasing the policy rate, and if I disagree with the technical reasons I will not hesitate to say so,” he opined.
Headline inflation rate for the month April 2022 was 23.6%
Compared to that of the previous month, headline inflation is 4.2 percentage points higher than the 19.4% recorded in March 2022.
The month-on-month inflation between March 2022 and April 2022 was 5.1%.
Four divisions (Transport, Household Equipment and Routine Maintenance, Food and Non-Alcoholic Beverages, and Housing, Water, Electricity, Gas and Other Fuels) recorded inflation rates above the national average of 23.6% with Transport (33.5% ) recording the highest inflation for the inflation rates of all divisions).
Central Region again recorded the highest month-on-month inflation (8.8%).
All regions recorded positive month-on-month inflation rate in April 2022 (above 2.0%).
Food and non-food inflation
This month’s food inflation (26.6%) is higher than both last month food inflation (22.4%) and the average of the previous 12 months (13.5%).
Food inflation’s contribution to total inflation, however, decreased from 51.4% in March 2022 to 50.0% in April 2022.
Overall month-on-month food inflation was 5.8%, which is higher than both the twelve month national month-on-month rolling average of food inflation (2.0%) and the rate recorded for April 2021 (2.3%).
All the 15 food subclasses recorded positive month-on-month inflation with Fruit and Vegetable Juices recording the highest (15.3%).
Non-food year-on-year inflation on average went up again in April 2022 compared to March 2022 (from 17.0% to 21.3%).
Only one out of the 12 non-food divisions had the 12 months rolling average to be higher than the year-on-year inflation for April 2022 for the divisions.
Transport is the division that recorded the highest inflation in April 2022 (33.5%).
Imported and local inflation
The inflation for imported goods was 24.7% (which is higher than the 17.3% recorded for March 2022) while the inflation for locally produced items was 23.0% (up from the 20.0% recorded in March 2022).