Business Analyst, Courage Bouti has predicted a fall of inflation in the coming months.
Reacting to the Bank of Ghana’s upward adjustment of the interest rate from 17 per cent to 19 per cent, he said the move is to control the second-round effects of administered price adjustments which would further amplify the inflation pressures outlook.
This is makes the second consecutive time the Monetary Policy Committee of the Bank of Ghana has consecutive time increased the Policy Rate – the rate at which it lends to commercial banks by 200 basis points to 19 per cent.
The increase in the Central Bank’s monetary policy rate means cost of borrowing is expected to go up at least for the next two and half months.
Prior to the announcement of the Policy Rate, the Central Bank had indicated its intention to tame inflation in order to bring interest rates down and consequently lending rate.
Mr Bouti, nonetheless, noted that the impact of the rate on prices of goods and services would not be instantaneous.
He, however, said inflation is endemic given the hikes in tariffs and petroleum products.
“In BOG’s assessment, inflation is becoming very endemic. Utility Regulation Commission are reviewing utility prices, consistent rise in fuel prices are all factors which amounts to inflation. What the Bank of Ghana wants to do is to send a signal to the market pledging their commitment anchoring inflation expectation into the future.
It will take some time for us to see the impact of the policy rate in the coming months,” Bouti stated.
