A Finance Lecturer and Associate Professor with Andrews University in Michigan, USA, Dr Williams Peprah, has welcomed the decision by the Bank of Ghana to increase the policy rate by a further 3 percentage points to 22%.
However, he is unhappy the Bank of Ghana failed to cap government borrowing to reduce inflation.
Reacting to the increase in the Central Bank’s base lending rate to commercial banks, Dr Peprah said the monetary authority should have put a cap on the amount government borrows, so far as it has put a limit on the primary reserves of banks.
“So far as the Central Bank has put a limit or has increased the primary reserves for banks, it must also put a cap on the amount [borrowings] government withdraws from its account which is called debt monetization or printing of money”.
According to him, the printing of money is one of the major impacts on increasing inflation, “so, I was hoping that the Central Bank will address the issue”.
He however said “the Bank of Ghana’s monetary policy decision of increasing the rate to 22% is a good thing that we need now in the country. Because, we’ve noticed the disparities between the monetary policy rate, inflation rate, and treasury bill rate.”
“At the moment, the Treasury bill rate is hovering around 27% and the difference between that one and the monetary policy rate is worrisome. So moving it up to 22% is something that will be able to address the issue”.
On the Central Bank’s decision to boost the supply of foreign exchange into the economy and help stabilise the cedi, Dr. Peprah said the Central Bank should not limit it to only three industries (mining, oil and banking), but also to the other sectors of the economy.
“The Central Bank should not limit its discussions to only these three industries, but also to the service sector by focusing on telecommunications, because the firms hold some foreign exchange exposure.
Indeed, the cost of borrowing already will go up as I have mentioned because banks are now pegging their cost of funds to the Treasury bill rate and not the monetary policy rate”.
Latest Stories
-
Employees must file annual income tax returns – Ghana Revenue Authority
18 mins -
Does the Police law empower police to run a broadcasting service?
1 hour -
GFA dissolves Black Stars Management Committee after AFCON qualification disappointment
1 hour -
The Thomas Partey Tournament: Empowering Ghana’s Youth through football
2 hours -
Nana Akomea calls for public inquiry into ‘expired rice’ saga
2 hours -
Maintain Otto Addo despite AFCON 2025 no-show – Nana Akomea advises GFA
2 hours -
GFA issues apology to Ghanaians for Black Stars failure to qualify for AFCON 2025
2 hours -
Nautyca releases new single ‘Nalani’
3 hours -
Ablakwa slams Chief of Staff for ‘whitewashing’ ‘expired rice’ for SHS scandal
3 hours -
Regulators of financial institutions urged to develop policy framework for climate financing
3 hours -
Akufo-Addo: New BoG HQ to enhance reform capacity and investment climate
4 hours -
DRIP initiative improves over 80km of roads in Greater Accra, says RCC
4 hours -
Akufo-Addo to commission over 80 educational projects today
4 hours -
Police to set up Election Task Force Briefing Centre for 2024 polls
4 hours -
AFCON 2025: GFA to apologise to Ghanaians for Black Stars failure
4 hours