Economist and senior lecturer at the Ghana Institute of Management and Public Administration (GIMPA), Dr. Raziel Obeng-Okoh, has criticised the Bank of Ghana’s decision to maintain the Monetary Policy Rate (MPR) at 28%, describing it as overly cautious and misaligned with current economic fundamentals.
According to him, the central bank missed a critical opportunity to ease the policy stance by at least 200 basis points, arguing that the macroeconomic indicators, particularly export earnings, remittance inflows, and reserves warranted a more supportive policy signal to bolster growth.
Governor of the BoG, Dr Johnson Asiama in announcing the decision of the Bank’s Monetary Policy Committee (MPC) stated that the cedi had rebounded strongly against the major trading currencies driven by a combination of factors, including tight monetary policy stance, ongoing fiscal consolidation, record reserve accumulation, strict enforcement of foreign exchange market rules, and improved market sentiment.
The BoG boss argued that in spite of the positive developments, “the Committee observed that the current level of inflation remains high relative to the medium-term target and will require maintaining the tight stance to reinforce the disinflation process. Under the circumstances, the Committee, by a unanimous decision, maintained the policy rate at 28%.”
But according to Dr Obeng-Okoh , “I expected the policy rate to drop because 28% is too high. If you look at the fundamentals, our proceeds went up, good production, prices and volumes all increased. Our reserves jumped to 4.7 months of import cover, which is quite strong. So why maintain such a tight rate?” he questioned.
Dr. Obeng-Okoh explained that “inflation has been declining since December, albeit slowly. But what matters is the expectation. Market sentiment is positive, and all indicators point to further disinflation. Monetary policy should reflect that optimism.”
He also raised concerns about the widening disconnect between monetary and fiscal policy tools. “Right now, the 91-day Treasury bill is around 14%, the 182-day is 15%, and the one-year is about 16%. But the Bank of Ghana’s rate remains around 28%. This mismatch signals a lack of coordination,” he explained.
Dr. Obeng-Okoh maintained that a reduction in the MPR would have supported economic activity while aligning more closely with declining inflation expectations and improved reserve buffers. “If I were the governor, I would have dropped the rate by 200 basis points. Holding it steady sends the wrong signal,” he stressed.
