Professor of Finance at the University of Business School, Prof. Godfred Bokpin has said the policy rate increase would stifle access to credit by businesses, and affect expansion in employment.
Reacting to the latest policy rate hike from 28 percent of the Bank of Ghana.
He said, given the 54.14 inflation and other economic factors the latest increase will not achieve the objectives informing the increase.
” For price stability to occur consistently it will mean that the monetary policy and fiscal policy are complementing each other. On the other hand , while bank of Ghana the tries to mop up excess liquidity supposedly by increasing the increase rate, you can see that the 100 basis point really isn’t that much.
And when you see where inflation rate is and where policy rate is, you can see, the gap there is an admission that there’s a lot that has to come from the fiscal and structural side to address the push factors than monetary policy can handle.
Normally when bank of Ghana increases the policy rate it signals tightening of credit in the market and therefore businesses will shrink a bit. They may not be able to expand the way they would have wished.
If the output is going to suffer, then it means that job creation that will come along with the expansion of the economy will also be sacrificed.” He said.
