10 Must-Know Insights from Bright Simons on Ghana’s Cedi & Macro Policy

1. Bright Simons explains that all prices in the economy, like inflation, interest rates, treasury bills, and exchange rates, are connected and influence each other.
   
2. According to Bright, exchange rates are unique because they are more exposed to foreign pressures, particularly the US dollar, US inflation, and interest rates.
   
3. Bright points out that movements in US and Ghanaian prices affect how people perceive their purchasing power to buy goods from each other.
   
4. He notes that in June 2025, the Cedi was overvalued, with a REER spike of roughly 35%, which didn’t align with reserves, productivity, or trade fundamentals.
   
5. Bright highlights that governments sometimes defend an overvalued Cedi for policy or political reasons, even if it conflicts with economic fundamentals.
   
6. He also explains that the collapse in Treasury Bill yields has winners and losers: while it helps government finances, it negatively affects people relying on T-bill interest for income, like retirees or diaspora families.
   
7. According to Bright’s estimates, about 20% of retail T-bill investors may fall into this vulnerable group who depend on the interest income rather than capital gains.
   
8. Bright suggests that an independent Fiscal Council could impose discipline and prevent politically motivated decisions that distort the Cedi or Treasury Bill yields.
   
9. He emphasizes that sudden changes in macroeconomic indicators, like currency appreciation or T-bill rate shifts, always create both winners and losers in society.
   
10. Finally, Bright argues that maintaining stability and a steady approach in managing exchange rates and interest rates is crucial to protect both the economy and ordinary citizens’ welfare.

So What?

Bright reminds us that macroeconomic decisions aren’t just abstract numbers, they have real effects on people’s wallets, livelihoods, and trust in government. Policies that temporarily support the state, like defending an overvalued Cedi or lowering Treasury Bill yields, can create winners and losers. The key, he argues, is a disciplined, steady approach, potentially through independent oversight like a Fiscal Council, to balance growth, stability, and fairness for ordinary Ghanaians.

Read More Here: https://x.com/BBSimons/status/1960339519460233633