Economists have ruled out any significant impact of the change in government on the operations of the Monetary Policy Committee of the Bank of Ghana.
It follows the commencement of the MPC’s first regular meeting for 2017 on Monday January 16th, 2017.
Per the regulations governing the Central Bank, the Governor of the central bank is the Chairman of the MPC.
Even though conventionally, governors exit with outgoing governments, the NPP government is yet to outline its plan for the central bank.
But Economist Professor Godfred Bokpin tells Citi Business News the independence of the BoG should not affected by the change in government.
“To a large extent, the Bank of Ghana’s regulations make the central bank independent and for that reason a change in government necessarily should not create a problem for the economy… largely Monetary Policy seeks to complement the government’s fiscal policies in addressing the developmental challenges of the country,” Professor Godfred Bokpin stated.
MPC urged to reduce policy rate
The Monetary Policy Committee at its last meeting in November 2016, reduced the prime rate by 50 basis points.
That was the first time the figure was reduced after maintaining it for five consecutive times in 2016.
The policy rate is currently at 25.5 percent.
Commenting on the likely decision of the MPC, Professor Godfred Bokpin highly anticipated a reduction in the policy rate.
According to him, the Committee should reduce the policy rate by at least 200 basis points considering the prevailing inflation figures, relative stability in the cedi and the goodwill that is associated with the new government.
“We are looking at inflation that is at 15.4 percent; of course I think anything between 200 and 500 basis points reduction, that is between 22.5 and 23 percent would be appropriate,”
“If the government says they are pursuing growth and employment creation, then the policy rate will have to be reduced.”
By: Pius Amihere Eduku/citibusinessnews.com/Ghana