Economic and Trading stakeholders in Ghana have described as disappointing and callous the Monetary Policy Committee (MPC) of the Bank of Ghana’s (BoG) increment of policy rate to 17%.
For the first time since November 2021, BoG has increased the rate by 250 basis points to 17 percent, citing inflation as well as the increase in prices of goods and services including petroleum as cause.
But, GUTA’s second Vice, Clement Boateng divulged the increase is disappointing as the rate could have been maintained at the previous 14.5% rating.
Per his view, the country has limited purchasing power, contrary to the claims of inflation the Central Bank is trumpeting.
“We have books Economics and that which describes the actual situation on the ground. The Bank of Ghana is going by the book economics. Practically, we the traders are feeling the heat. Already we are complaining of low patronage because the Ghanaian consumer has been overstretched to the elastic limit. The purchasing power is even low so how do they even purchase items on the market.”
Based on his assumption, the BoG’s claim does not corroborate with the practicality, he said in an interview on Adom TV’s The Big Agenda.
Mr Boateng explained the consequences of the increment; hypothesizing the cost of doing business will be higher.
According to him, the banks will now pay higher due to the increase on margins on lending rate, and that burden will be shed on the consumers.
He predicts the impacts would not be immediately felt, but in the third quarter of the years when consumers are hit with exorbitant prices.
Speaking on the same platform, Executive Secretary at Importers and Exporters Association, Aasaki Samson Awingobit, also said it is callous on the part of the Central Bank to increase base rate.
According to him, when the economy is stable, no reduction is made, but the BoG is quick to increase rate whenever margins don’t go in their favour.
In an media address on Monday, the Governor of the Central Bank, Dr. Ernest Addison announced the 2.5% increment.
“Headline inflation has risen sharply to 15.7 percent in February 2022, and both headline and core inflation are significantly above the upper limit of the medium-term target band. The uncertainty surrounding price developments and its impact on economic activity is weighing down business and consumer confidence. The risks in the outlook for inflation are on the upside and include petroleum price adjustments and transportation costs, and exchange rate depreciation.”
“Under these circumstances, the committee has decided to increase the policy rate by 250 basis points to 17 percent. The Bank’s latest forecast still depicts an elevated inflation profile in the near term, with inflation falling within the medium-term target band within a year,” he notified.