‘If BoG had no longer intervened inflation would have been 100%’ – Head of UG’s Economics Dept.

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Head of Economics Department at the University of Ghana, William Baah-Boateng has commended the Bank of Ghana (BoG) for its swift method to amplify the coverage charge through 300 foundation factors to 22%, after an Emergency Monetary Policy Committee.

Dr. Baah-Boateng indicated that had the BoG no longer intervened, the country’s inflation fee would have been 100%.
“In economics, there is some thing we name counterfactual so if the problem is coming and they don’t even step in at all, possibly we would have been in the 100’s,” he said.

Currently, year-on-year inflation shot up to 31% in July 2022, latest records from the Ghana Statistical Service (GSS) has revealed.

Dr. Baah-Boateng’s remarks are in relation to the selection with the aid of the Bank of Ghana to increase the policy price via 300 groundwork factors to 22%, after an Emergency Monetary Policy Committee meeting on August 17, 2022.

The pass is section of measures to address the dangers to the inflation outlook.

However, the value of borrowing is expected to go up significantly, and consequently, enlarge value of residing and doing business.

Increasing policy rate will not bring down rising inflation – Financial Advisor

In the meantime, a Partner at Deloitte Ghana, Yaw Lartey has expressed fear about the accelerated coverage rate, pronouncing it will now not address the rising inflation rate, however as a substitute shoot up cost of borrowing.

According to him, though the economic policy rate traditionally has helped to manipulate inflation, the modern-day financial scenario proves otherwise.

Dr Baah-Boateng, in response, mentioned that, for the reason that the measures have been applied “and we are here, it will be very hard for you to measure whether indeed the policy is no longer working.”

Dr Baah-Boateng, in response, mentioned that, for the reason that the measures have been applied “and we are here, it will be very hard for you to measure whether indeed the policy is no longer working.”

For this reason, he urged that feedback that the policy is no longer working need to be put in perspective.

He defined that fiscal coverage and economic policy are supposed to play complementary roles, adding that each can’t stand alone therefore there is a want to observe the place the inflation is coming from.

He observed that the inflation is coming from the grant side consequently Central bank has no function to play.