The two percentage points cut in the Monetary Policy Rate has been warmly welcomed by the Ghana Union of Traders Association (GUTA).
GUTA says the drop from 29% to 27% although it could have been better is positive news since businesses have been struggling under the high cost of borrowing making the business environment unconducive for them to thrive and expand.
Speaking in an interview with The High Street Journal, President of GUTA, Dr. Joseph Obeng expressed his optimism that this cut in the policy is expected to reflect in lending rates in the country to give some respite to the business community.
He again commended the Central Bank for the bold decision to cut the rate. According to the President of GUTA, BoG deserves commendation given that they have been able to navigate the economy through hard times when inflation and other major indicators were performing abysmally to the point that these indicators are showing positive signs.
“It’s a positive indication. The fact that there is a drop from 29% to 27% is welcoming news even though it could have come down further. For now, the Bank of Ghana needs to be commended for navigating us through the hard times. Inflation was 54% and today inflation is about 20%,” Dr. Joseph Obeng noted.
He therefore cautioned that the gains made in stabilizing inflation and other indicators must be sustained to pave the way for further cuts in the monetary policy rate in the future.
He noted, “But what we have to say is that we have to sustain these gains and even make further efforts to bring them down further so that businesses can grow again.”
Given the gains made in stabilizing inflation, which led to a policy rate cut, GUTA is appealing to the Bank of Ghana to also stabilize the foreign exchange.
The Union says one major hindrance to the growth of business currently is the ever-depreciating local currency hence requiring serious attention by the Bank of Ghana.
He indicated that “the bane has always been the exchange rate – the stability of the local currency. Whatever we have to do, we have to make sure that we are able to stabilize the local currency. That has been the push factor for inflation and some of these indicators.”
Meanwhile, an economist at the University of Ghana Business School, Prof. Godfred Bokpin is pessimistic about the cut translating into a reduction inlending rates.
Prof. Godfred Alufar Bokpin says the 200 basis points reduction is insignificant to lead to a major reduction in interest rates for business which is currently hovering around 30%.
