BoG may not reduce policy rate in first MPC meeting - Economist

Dr. Eric Osei-Asibey

Economists, Dr. Eric Osei-Asibey has ruled out the possibility of a change in the policy rate to be announced by the Bank of Ghana.

This, he says is as a result of government missing its end of year inflation target of 11.2 percent.

Government recorded an 11.8 percent inflation rate at the end of 2017.

Currently, the policy rate, which is the rate at which the Central Bank lends to commercial banks is at 20 percent.

Speaking to Citi Business News on the matter, Dr. Osei-Assibey was of the view that the new inflation figure would highly influence the decision of the Bank of Ghana in determining the policy rate

“Of course now that government has missed its inflation target, it will also have an implication on monetary policy, the Central Bank will be meeting soon to determine the monetary policy rate”, he said.

Dr. Osei-Assibey stated that the development will inform the Bank of Ghana to assess the situation, before any decrease is made.

“Given that inflation target rate was not achieved and has deviated slightly from its course, it will suggest to the Central Bank that it cannot drastically reduce the monetary policy rate,” he said adding that the central bank’s aim is to use monetary policy tools to control pricing.

Touching on any possibility of a reduction in the policy rate, Dr. Osei-Assibey stated that it will be marginal if the Bank of Ghana considers it.

“I’m not expecting any drastic reduction in the monetary policy rate given this new development I’m sure even if it will be reduced its going to be very moderate otherwise I will expect that it will be maintained at the current figure”.