IEA charges gov’t to work with BoG to tackle key drivers of inflation

The Institute of Economic Affairs (IEA) has reiterated its proposal to help Ghana out of its current economic mess.

According to Dr. John Kwakye who is the Director of Research at IEA, government must work directly with the Bank of Ghana (BoG) to tackle the key drivers of inflation in the country.

In his view, once this is done, it will direct the country’s economy on a path to recovery.

“As I have repeatedly suggested, there is a need for Bank of Ghana and Govt to address directly the key drivers of inflation—food, fuel, exchange rate. Relying on the Policy Rate alone will be very costly,” Dr. John Kwakye said in a Tweet.

The comments are in reaction to the new policy rate announced by the Bank of Ghana.

After a meeting by the Monetary Policy Committee (MPC) of the BoG on Wednesday, August 17, the central bank announced a new policy rate of 22 percent.

Insisting that the new rate can be counterproductive, Dr. John Kumah wants the Bank of Ghana to change the forex-cedi reserve requirement regime to forex-forex regime.

“For Bank of Ghana to raise the reserve requirement of banks aimed at mopping liquidity that is fuelled in part by the bank’s own overdraft to Govt is not only difficult to justify but can also be counterproductive.

“BoG should change the forex-cedi reserve requirement regime to forex-forex regime. That is not only what the banks want but it will also boost forex available to BoG,” the IEA Director of Research shared.