For many businesses, households, and individuals anticipating a possible cut in the policy rate after the 131st Monetary Policy Committee (MPC)meeting of the Bank of Ghana (BoG), an economist says that expectation is not likely to happen.
Prof. Patrick Asuming, economist at the University of Ghana Business School, says the Bank of Ghana is most likely to leave its benchmark policy rate unchanged at the conclusion of its ongoing 131st MPC meeting.
He argues that the current economic conditions favour caution rather than another interest rate cut.
According to him, while inflation has remained below the central bank’s target path and businesses may welcome lower borrowing costs, the prevailing uncertainty surrounding the economic outlook makes it prudent for policymakers to maintain the current rate.
“Keeping the rate unchanged seems like the most likely outcome,” Prof. Asuming said, explaining that the central bank has little reason to either resume monetary easing or begin tightening policy at this stage.
He noted that although inflation is expected to continue easing, it remains too early for the Bank of Ghana to cut rates again given the uncertainties that still surround the economy.
At the same time, he argued that there is equally no justification for raising interest rates because inflation remains well below levels that would warrant a policy tightening.
Prof. Asuming pointed to recent economic data cited by the Bank of Ghana Governor, including the country’s latest Gross Domestic Product (GDP) figures and high-frequency economic indicators, which suggest that economic activity remains resilient.
According to him, the data indicate that Ghana’s economy is still performing relatively strongly despite external and domestic uncertainties, reducing the urgency for additional monetary stimulus.
He acknowledged that businesses may prefer another rate cut to lower borrowing costs and stimulate investment, but stressed that monetary policy should respond to broader macroeconomic conditions rather than sector-specific demands.
In his view, with no significant signs of weakness emerging from the real sector, maintaining the current policy rate would provide the Bank of Ghana with time to assess incoming economic data before making its next move.
