Governor of the Bank of Ghana (BoG), Dr Johnson Asiama, has said that the reduction in the policy rate amidst concerns of the impact of the Middle East crisis does not pose any problem at all.
On Wednesday, March 18, the Monetary Policy Committee (MPC) reduced the policy rate to 14 % from the earlier 15.5 per cent.
Consumer confidence improved on account of easing inflationary measures, Dr Asiama said.
He said the MPC noted continued improvement in the economy, but rising geopolitical tensions have deepened uncertainties.
“This cut isn’t problematic at all,” he said when asked whether the reduction would create [robme for Ghana given the geopolitical crisis.
Earlier, during the 129th MPC meeting on Monday, March 16, Dr Asiama stated during that the conditions that led to the economic recovery, especially in the financial sector, are currently under pressure due to the spill-over effect of the Middle East Crisis.
He said this when he opened the 129th Moneyray Policy Committee (MPC) meeting in Accra on Monday, March 16.
Referring to the last MPC meeting held in January, Dr Asiama said that the decision taken during that meeting was about restraint, but today, the judgment required is more complex.
“We must make our decision at the intersection of genuine domestic success and genuine external
uncertainty.
“The question before this Committee is not whether conditions have improved. They have, significantly and across the board. However, how do we respond to that improvement when the conditions that enabled it are under pressure?” he said.
He added “Central banking is not only about managing crises. It is equally about managing success, ensuring that progress achieved through disciplined policy is sustained. The decisions taken in this room
must therefore hold up under more than one scenario for how the global environment evolves in
the months ahead.”
Dr Johnson further said that the escalation of conflict in the Middle East has disrupted key energy and shipping corridors, increased volatility in global oil markets, and introduced new uncertainty into the trajectory of global inflation.
“For Ghana, the spillover channels are clear. Sustained oil price increases raise the risk of imported
inflation, which could necessitate policy tightening with implications for financial conditions,”
