A Senior Research Fellow at the Institute of Economic Research and Public Policy (IERPP), Dr. Frank Bannor, has raised critical concerns over the Bank of Ghana’s (BoG) decision to maintain the Monetary Policy Rate (MPR) at a steep 28%, despite what he describes as clear signs of economic stability and growing investor confidence.
In a strongly worded commentary posted on his Facebook timeline, Dr. Bannor, also a lecturer in economics at GIMPA challenged the rationale behind the BoG’s continued monetary tightening stance in the face of improving macroeconomic indicators.
“If current macroeconomic indicators are backed by sound policies and real sector growth, what is the fear with inflation?” he queried the BoG Governor and the Monetary Policy Committee.
He questioned the Bank’s reluctance to ease rates even as confidence in Ghana’s economic prospects continues to rise.
“Haven’t we been told that investor confidence is at its highest? Why the fear of a reduction in the MPR? We’re certainly practicing voodoo economics,” Dr. Bannor stated.
Dr. Bannor cautioned that the sustained high policy rate is placing a burden on the productive sector by driving up the cost of borrowing. He argued that the Bank’s current posture is inadvertently contributing to the persistence of high consumer prices, as businesses pass on their financing costs to consumers.
While acknowledging that the elevated MPR may be contributing to the recent decline in inflation, Dr. Bannor asserted that this disinflationary trend is unlikely to be sustainable without more market-responsive policies.
He warned that the central bank’s current policy mix, though effective in the short term, may carry longer-term risks if not recalibrated.
Dr. Bannor’s remarks reflect growing debate among economists and business leaders about the appropriate pace and timing of monetary policy adjustments as Ghana’s economy continues its post-crisis recovery.
