Bank of Ghana has failed us – GUTA President laments
President of the Ghana Union of Traders Association (GUTA), Dr Joseph Obeng, has lamented over the inability of the Bank of Ghana to check the cedi depreciation, rising interest rates and inflation.
According to Dr Obeng, the Central Bank’s inability to check the cedi depreciation, rising interest rates and inflation is crumbling the business community and putting a lot of people out of business.
Dr Obeng expressing frustration and disappointment in the Central Bank in an interview on Joy News’ PM Express monitored by norvanreports, noted the Central Bank has turned a deaf ear to the many clues given to it by the business community on how to resolve challenges with the cedi depreciation and inflation at large.
“The Bank of Ghana has failed us (businesses), because all these indicators (inflation, policy rates) are under its purview. It is not managing the inflation situation well despite the many clues we have given the Central Bank as to what to do.
“You are unable to manage the situation but you keep on increasing the policy rate, forgetting that your inability to manage the situation is what is increasing inflation,” he stated.
“The inflation we have now, is not because of excessive liquidity in the system, it is as a result of the accumulation of costs. Costs in the form of high interest rates which is about 35% because of the continuous increase in the policy rate for four times further compounding the situation and also the upward review of exchange rate of import duties.
“World freight charges hasn’t gone up but just recently, at the port, the exchange rate for import duties has been revised upward from GHS 8.4 to GHS 9.5, and all these add to the costs and ultimately fuel inflation,” he added.
The Central Bank at the recently held 108th Monetary Policy Committee (MPC) press briefing, increased its policy rate by 250bps.
On the back of the increment, the Bank of Ghana’s monetary policy rate rises to 24.5% from the previous rate of 22%.
Cumulatively, the policy rate hikes by the Central Bank since November last year, comes to some 11,000 basis points (11%).
The hike in policy rate by the BoG is on the back of the increment in the country’s headline inflation rate which hit a record high of 33.9% in August.
Given the hike in policy rate, interest rates on loans to the private sector is expected to increase, further making costs of production by businesses in the country more expensive.
Announcing the new policy rate, the Governor of the Central Bank, Dr Ernest Addison, noted the Bank’s decision to increase the policy rate is due to the fact that, “inflation remains elevated and the balance of risks is on the upside. Although the forecasts are for monthly inflation to continue to slow down, the risks are on the upside, emanating largely from pass-through effects of the currency depreciation, the recent upward adjustment in utility tariffs, and rising inflation expectations.
“The Committee remains committed to re-anchoring inflation expectations and returning to a disinflation path. Under the circumstances, the MPC decided to increase the Monetary Policy Rate by 250 basis points to 24.5 percent”.
