Dr. Ernest Addison, the Governor of the Bank of Ghana, says the inflation rate will see a decline for the rest of the year.
In an interview with Bloomberg, the Governor admitted that the current rate of inflation is worrying.
He noted that fiscal and monetary policies are being looked at by the government and the Bank of Ghana to reduce the current double-digit inflation rate, which is 23.6 per cent as of April.
“It’s an issue, which in a sense is baffling for all of us. A year ago inflation in Ghana was 7%% and now we find ourselves with high double-digit inflation. It’s a very complicated environment.
“Government and the Central Bank are very much aware of the problem. We’ve had very major decisions on fiscal consolidation. Expenditures have been cut by 20% among other things. We expect that these measures will serve as an anchor to inflation.
“A lot of the shocks that we are seeing now tend to be supply-side in nature, but we think the worst has gone through the system, and we expect that inflation will be tapering off for the rest of the year.”
The Monetary Policy Committee (MPC), according to Dr. Ernest Addison, will have a meeting during the week to discuss the current monetary policy rate which stands at 17%.
The Governor declined revealing what direction the Committee may be heading over the matter, explaining that “it’s a very complicated situation.”
Meanwhile, Dr. John Kwakye, the Director of Research at the IEA, has suggested that the monetary policy rate be increased to 19% to check inflation.
“This will help narrow the gap with inflation and also ease to some extent the risk of foreign currency outflows. The adjustment will also provide some assurance to the markets that the BoG is committed to addressing the resurging inflation. Anything less than this may be interpreted as a weak response, which may be concerning to the markets.”
The Ghana Statistical Service (GSS) has revealed that the country’s inflation rate as of April stands at 23.6%.
The Consumer Price Index (CPI) data by the Ghana Statistical Service indicates a 4.2% increase from the initial 19.4% in March.
According to the GSS, the yearly rise in inflation is due to the continued rise in food and transportation prices, the latter being said to have contributed significantly.
Finance Minister reacts
The Finance Minister Ken Ofori-Atta has attributed the country’s rising inflation to factors beyond government’s control.
He said almost all African countries are facing similar situations.
These crises he mentioned are “rising food prices, rising energy prices, tightening financial conditions”.
“Today, 41 African economies are severely exposed to, at least, one of three concurrent crises, rising food prices, rising energy prices, tightening financial conditions Finance Ministers now call it the dreaded three Fs; food, fuel, and financial conditions.”
Source: The Independent Ghana