GNCCI critiques BoG’s policy rate hike; says rate hike not to effectively tackle inflation
The Ghana National Chamber of Commerce and Industry (GNCCI) has taken a critical stance against the recent policy rate increase implemented by the Bank of Ghana, challenging the central bank’s assertion that the hike aims to control inflation and liquidity in the system.
The GNCCI contends that the adopted strategy to tame inflation has proven ineffectual, as inflationary pressures continue to surge.
Emphasizing their concerns, the GNCCI argues that the 30% policy rate will compound the prevailing challenges faced by the industry and potentially exacerbate business closures.
Mark Badu-Aboadgye, the Chief Executive Officer of GNCCI, expressed reservations regarding the government’s approach to managing inflation, particularly in light of taxation and the scarcity of essential food supplies.
“If you continue to increase tariffs, this monetary policy will not yield desired outcomes. Food inflation remains alarmingly high, and we are grappling with inadequate food supplies. When more money chases fewer goods, the efficacy of monetary policy is compromised, facing a supply-side constraint,” Mr. Badu-Aboadgye explained.
The GNCCI CEO stressed that the surge in food prices and escalating production costs will inevitably translate to higher consumer prices, further fueling inflationary pressures.
He posited that the current implementation of monetary policy has not proven effective in curbing inflation and cannot adequately address Ghana’s soaring inflation rates.
In June 2023, Ghana’s annual inflation rate reached 42.5%, surpassing the central bank’s target band of 6% to 10%. The uptick in overall inflation can largely be attributed to surging food and beverage prices, which increased from 51.8% in the previous month to 54.2%.
The GNCCI’s critique highlights the complexity of addressing inflationary challenges in Ghana’s economy. As policymakers grapple with these issues, market participants and stakeholders closely monitor developments, seeking effective measures to stabilize the economy and support businesses amidst mounting inflationary pressures.
