Bank of Ghana (BoG) has denied allegations of profiting from elevated interest rates.

In a statement released on its official X account, formerly Twitter, the Central Bank clarified that the increased interest rates actually escalate the expenses related to open market operations, ultimately leading to financial losses for the bank.

“Bank of Ghana does not benefit from high interest rates. On the contrary, high interest rates raise the cost of open market operations and lead to central bank losses.

But it is a necessary price to pay to bring down inflation,” the Bank of Ghana said on May 18, 2024.

This reaction follows criticism from businessman and the Agbogbomefia of the Asogli State, Togbe Afede XIV, who accused the Bank of Ghana of unfairly benefiting from its policy of maintaining high interest rates, as outlined in an opinion piece.

Togbe Afede XIV expressed concerns that these interest rates, which he deemed as "unnecessarily high," could exacerbate challenges faced by the local currency if appropriate actions are not taken to address the issue.

He further warned that the performance of the cedi is likely to suffer from ripple effects on the prices of goods and services, consequently impacting the overall cost of living.

“The truth is, all these variables are related. While the policy rate is an important tool of monetary policy, its misuse, as in our case, can have damaging effects.

As long as interest rates are kept unnecessarily high, our currency, the cedi, will continue to suffer adverse consequences, with pass-through effects on other prices, including transport fares, utility tariffs, and fuel prices.

Persistent cedi depreciation has been a key factor in our energy (including power) sector problems. We have always felt the need to adjust prices, not because consumers were not paying enough, but because the cedi has been depreciating,” Togbe Afede XIV wrote.

He added, “BOG concluded that their monetary policy rate decision underscores their commitment to balancing economic stability amid persistent ‘inflationary risks’ and supporting the sustainable growth of the economy.

But economic stability and sustainable high growth will remain elusive as long as interest rates stay astronomically high.”