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IEA to BoG: Increase policy rate to 19.5%

The Institute of Economic Affaires has said the move will help narrow the gap with inflation and also ease the risk of foreign currency outflows

The Institute of Economic Affairs (IEA) has urged the Bank of Ghana (BoG) to increase the policy rate by another 200 basis points to 19.0%.

According to the IEA, this will help narrow the gap with inflation and “also ease to some extent the risk of foreign currency outflows.”

The IEA in a statement said, “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 BoG must buttress its decision with an effective communication strategy to make its intentions clear so that the Bank can rally the markets behind the decision,” the statement added.

“It has to be said that the above discussion is made in the context of the IT framework that BoG signed on to since 2007.”

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