Dr. Benjamin Amoah, a Senior Finance Lecturer at the University of Ghana Business School (UGBS), has expressed his optimism that the recent policy rate hike by the Bank of Ghana’s Monetary Policy Committee will have a manageable impact on businesses in the country.
On July 24, 2023, the central bank raised its key lending rate by 50 basis points, bringing it to 30%, with the primary goal of curbing inflationary pressures within the economy.
In a recent interview with Joy Business, Dr. Amoah emphasized that the incremental 50 basis point increase is poised to assist in controlling inflation while ensuring economic stability.
He confidently asserted that businesses are well-equipped to withstand this moderate adjustment without facing severe disruptions.
“The Central Bank considered all factors and arrived at the 50 basis point increase. In this case, I’m sure they realized the need for a slight upward adjustment, particularly in light of last month’s inflation rate,” stated Dr. Amoah.
Highlighting the resilience of Ghanaian businesses, Dr. Amoah posited that companies are unlikely to resort to significant price hikes in response to the marginal policy rate increase. Furthermore, he foresees banks being cautious in adjusting their lending rates in reaction to the policy rate adjustment.
“The impact on businesses is projected to be marginal; enterprises will not feel compelled to raise prices significantly due to a mere 50 basis point change in the policy rate. Moreover, I don’t anticipate banks swiftly increasing their lending rates in response to this adjustment. The effects are expected to be less pronounced compared to adjustments of 150 or 200 basis points,” Dr. Amoah stated.
Amid discussions of economic recovery, Dr. Amoah urged the banking sector to play a pivotal role in supporting growth across various sectors. While acknowledging the banks’ return to profitability due to the Domestic Debt Restructuring Programme (DDEP), he underscored the importance of fostering a more comprehensive alignment with other sectors of the economy.
“The challenge lies in enhancing the connection between the banks and other sectors. It is essential to ensure that the positive developments extend beyond the banking industry and positively impact all sectors of Ghana’s economy. This collaborative approach will be crucial in supporting the nation’s overall economic revival,” added Dr. Amoah.
As Ghanaian businesses navigate the evolving economic landscape, market observers are closely monitoring the measured approach taken by the Central Bank and its implications for sustained growth. With Dr. Benjamin Amoah’s expert insights, businesses and investors gain valuable perspective on the potential effects of the recent policy rate increase on the country’s economic trajectory.
