The Director of Research at the Institute of Economic Affairs (IEA), Dr John Kwakye has said that monetary policy needs resetting as the year ends with inflation of 23%, Policy Rate of 27% and depreciation of 20%.
To him, the time has come for the Bank of Ghana (BoG) to be made more accountable for delivering its inflation and exchange rate mandates.
The primary objective of the Bank of Ghana is to pursue sound monetary policies aimed at price stability and creating an enabling environment for sustainable economic growth.
Price stability in this context is defined as a medium-term inflation target of 8 percent with a symmetric band of ±2 per cent at which the economy is expected to grow at full potential without excessive inflation pressures.
Other tasks for the Bank of Ghana include promoting and maintaining a sound financial sector and payment systems through effective regulation and supervision. This is important for intermediation since risks associated with financial markets are taken into account in monetary policy formulation.
To achieve the objective of price stability, Bank of Ghana was granted operational independence to employ whichever policy tools were deemed appropriate to stabilise inflation around the medium-term target.
The Bank of Ghana’s framework for conducting monetary policy is Inflation Targeting (IT), in which the central bank uses the Monetary Policy Rate (MPR) as the primary policy tool to set the monetary policy stance and anchor inflation expectations in the economy.
In a post on his X page, Dr John Kwakye said that “Stabilising prices and the exchange rate is simple practical economics. It is not rocket science!”
He added “Closing the year with inflation of 23%, Policy Rate of 27% and depreciation of 20%, represents glaring failure of monetary policy, which needs resetting.”
The post Monetary policy needs resetting – John Kwakye first appeared on 3News.
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