An economist at the University of Ghana, Dr. Adu Owusu-Sarkodie, has cautioned the Bank of Ghana (BoG) against rushing to reduce the monetary policy rate, warning that such a move could undermine recent progress in controlling inflation.
Speaking on JoyNews’ PM Express, Dr. Sarkodie pointed to historical trends where premature rate cuts led to a resurgence in inflation, derailing efforts to maintain macroeconomic stability.
“We’ve seen this before—each time we ease too soon, inflation shoots up again,” he said. “The Bank of Ghana must tread carefully, especially when inflation is not yet firmly under control.”
Although Ghana’s inflation has been on a gradual downward trend, it still remains above the BoG’s medium-term target. Dr. Sarkodie noted that with global commodity prices fluctuating and domestic pressures such as food and fuel costs remaining volatile, any policy misstep could reverse recent gains.
The Bank’s Monetary Policy Committee (MPC) is expected to announce its next decision on the policy rate in the coming days. While some analysts are calling for a rate cut to boost economic growth, others, including Dr. Sarkodie, warn of the inflationary risks.
“We all want growth, but not at the expense of stability. If inflation returns, the costs will be even higher—especially for low-income households,” he stressed.
The policy rate, currently at 28%, remains a critical tool in the BoG’s efforts to rein in inflation. Any decision will signal the central bank’s policy direction to financial markets and the business community.
As the BoG weighs its options, experts like Dr. Sarkodie are urging a cautious, data-driven approach to protect the country’s fragile economic recovery.
Source: Joy Business
