Ghana: StanChart chief economist urges further hikes in monetary policy rates
Chief Economist at the Standard Chartered Bank Group, Raza Khan, has made a strong case for further hikes in the Bank of Ghana’s policy rate to help check soaring inflation and slow down the depreciation of the Ghana Cedi.
Her advice is coming at a point where the monetary policy committee of the Bank of Ghana have started meetings to review the economy, the MPC is expected to draw the curtains on its meetings come Friday, November 25, 2022 and announce a new policy rate next week.
In a conversation with the media, the Chief Economist from London says more has to be done to deal with the recent depreciation of the cedi.
“It is more important for the Bank of Ghana to use whatever tool available to it and if that means effecting or tightening, so be it, to try to stabilize the Ghana cedi.
“For the moment, the Bank’s priority should probably be to avoid situations where expectations of currency depreciation becomes so fulfilling. And the only thing they can do in the absence of having the actual doors to which to intervene is to tighten liquidity.”
Additionally, as to whether the policy rate will need a hike or not, Khan continued to say, “Not just a policy rate hike, perhaps other policy means will blank its tightening. So the increase is in the cash reserve ratio, do whatever is needed to try to bring liquidity conditions to a point where people don’t have an incentive or have an expectation that the Ghana cedi is going to continue to weaken,” she said.
