Price Stability Comes at a Cost – Says Prof. Turkson on BoG’s Policy Choices
Professor Ebo Turkson, Associate Professor of Economics at the University of Ghana and External Member of the Monetary Policy Committee of the Bank of Ghana, has underscored the inherent trade-offs associated with macroeconomic policy decisions, stressing that efforts to stabilise the economy inevitably come at a cost.
Speaking on TV3’s Key Points programme on the topic “Ghana’s 2025 Macroeconomic Story and 2026 Outlook,” Prof. Turkson noted that no economic policy intervention is without consequences, particularly those aimed at maintaining price stability.
“Every economic policy comes at a cost. You can’t implement policy without incurring some cost,” he stated, adding that the primary mandate of central banks globally including the Bank of Ghana, remains price stability.
He explained that while certain policy actions may impose short-term costs, the broader economic damage caused by high inflation is far more severe.
“When inflation is high, it destroys everything in the economy. Consumers are worse off, businesses cannot plan, and the overall macroeconomic environment becomes unstable,” he said.
According to him, such instability undermines investor confidence and limits the country’s ability to attract foreign direct investment, ultimately constraining job creation in an economy with a growing youth population.
Prof. Turkson speaking further, indicated that policy decisions taken during the peak of Ghana’s economic turbulence in 2022 were particularly difficult but necessary.
He noted that at the time, inflation had surged to about 54 percent, while interest rates hovered around 30 percent, requiring decisive and data-driven interventions to restore stability.
“Everything the Central Bank does is data-driven. Given the data and technical assessments presented to the Committee, we had to take difficult decisions with a clear focus on restoring price stability,” he added.
Meanwhile, Governor of the Bank of Ghana, Dr Johnson Asiama, has disclosed that the Bank’s 2025 Financial Statement will reflect the true costs of the macroeconomic stabilisation achieved over the past year.
Dr Asiama made the disclosure during a meeting with the Council of State on April 23, 2026, where he provided an overview of the Bank’s operations and key policy interventions.
He explained that the Bank’s tight monetary policy stance, particularly through interest rate adjustments and open market operations, came with associated costs but was essential in reducing inflationary pressures.
The Governor also pointed to the Gold Purchase Programme as a key contributor to reserve accumulation, although he acknowledged that the initiative carried structural costs, which have since been significantly reduced.
He noted that the Bank’s policy measures have yielded strong macroeconomic outcomes, including a sharp decline in inflation to 3.2 percent in March 2026, a record build-up in international reserves to US$14.5 billion, a 41 percent appreciation of the cedi, and improved resilience within the banking sector, which is increasingly supporting private sector credit growth.
Overall, the Governor maintained that while the stabilisation process has imposed financial and operational costs on the Central Bank, the resulting macroeconomic gains underscore the necessity of the policy choices made.
