The Ghana Union of Traders Association (GUTA) is expectant of a reduction in the Monetary Policy Rate ahead of the Monetary Policy Committee (MPC) announcement next week.
GUTA is optimistic that the gains made in the stability of the cedi in recent days are likely to compel the MPC to further reduce the policy rate which could help reduce lending rates and bring some respite to the business community.
The Bank of Ghana began its 121st Monetary Policy Committee meeting on November 20, and it’s expected to conclude today, November 22, 2024. The announcement of the monetary policy decision is scheduled to take place on Tuesday, November 25, 2024.
This new announcement will come on the heels of the previous meeting in September which led to a cut in the rate from 29% to 27% citing a downward inflationary trend as the main reason for the cut.
However, immediately after the cut, inflation has been recording a marginal upward surge in the last two months which some analysts believe threatens another cut in policy rate.
But the President of GUTA, Dr. Joseph Obeng in an interview with The High Street Journal is optimistic that the appreciation of cedi could possibly lead to a cut in policy rate as the local currency’s stability could likely minimize the inflationary pressures going forward.
“We are expecting that they are going to reduce the monetary policy rate because you know the indicators are intertwined. So if the cedi appreciates, then it also affects positively the prices of goods and then, it also trickles to the other indicators,” he indicated.
He further noted that, “the stability of the cedi is the anchor of the other indicators including the inflation and then interest rate. When there’s stability then it affects positively the other indicators which I believe that it will affect positively the monetary policy rate by the Bank of Ghana in the coming weeks.”
He was however quick to add that despite the business community’s expectations, the final decision lies with the Bank of Ghana. Dr. Joseph Obeng maintained that the members of the Monetary Policy Committee are the experts and hence whatever decision they take to bring inflation will be welcomed by GUTA.
He added that they trust their judgment as the economic managers despite their expectation of a policy rate cut.
The business leader said, “Much as it is my anticipation, we leave it to them, the experts to manage it the best way they have been doing. I believe in the measures of the economic managers in their quest to bring inflation down. I have a great deal of confidence in the Bank of Ghana to steer the affairs of this economy.”
He again commended the Central Bank for what he describes as a “yeoman’s work” in bringing down inflation which used to be astronomically high at 54% to what we have now.
“Let me take this opportunity to also praise the Bank of Ghana they’ve done a yeoman’s work with inflation from 54 percent to what we are experiencing now. They have adopted prudent strategies to bring inflation down. I believe that they are going to also follow the trend of the appreciation of the cedi. Definitely, the stability of the Cedi should pull down the monetary policy rate. And that’s exactly what my expectation is,” the President of GUTA indicated.
