Governor of the Bank of Ghana (BoG), Dr Ernest Addison, says the country has experienced the worst part of recent inflation increments witnessed over the past one year.
According to the Governor, inflation rate is expected to taper (reduce or lessen) for the rest of the year.
His assertion is based on recent monetary and fiscal policies undertaken by both the government and Central Bank which he asserts will anchor inflation in the country.
“The government is very much aware of the problem and has made major fiscal consolidation decisions, made expenditure cuts and we on our part have raised the policy rate.
“We have also raised the reserve requirements of the bank’s which will also draw liquidity from the economy, so broadly all these fiscal and monetary measures should impact on aggregate demand.
“So we expect that these measures will serve as an anchor to inflation. A lot of the inflation increments have turned out to be supply sided, but we think that the worst has already gone through the system and we expect that inflation will be tapering off for the rest of the year,” the Governor state speaking in an interview monitored by norvanreports.
23.6% inflation rate baffling – Dr Addison
Meanwhile, the Governor has described as baffling the upward trend in the country’s headline inflation rate from single digits last year to double digits this year.
According to the Governor, the rise in inflation is a surprise to the Central Bank given the 5.4% GDP growth rate recorded at the end of 2021 despite the Covid pandemic and subsequent increments in the monetary policy rate by the Bank.
Speaking in an interview with Bloomberg monitored by norvanreports, the Governor described the country’s current economic environment as a complicated one.
“Inflation was single digits at 7.5% last year and then a year later it is high and in double digits, it’s now a very complicated environment seeing that Ghana was able to weather the Covid pandemic without recording a negative growth rate in 2020 and in 2021 the economy picked up well and recorded 5.4% growth rate.
“For us at the Central Bank we anticipated the growth rate and so increased the policy rate in November last year by a 100 basis points and we were rather surprised by the inflation rate which came later on in February particular which triggered the 250 basis points increase in the policy rate,” he noted.
The MPC will be meeting and I do not want to pre-empt the discussions and decisions that will take place as well as the outcome, but really it’s a complicated situation and we will take a decision on what to do with the current policy rate of 17%,” the Governor added.
Source:norvanreports
