News:
March 21, 2019
The Minority in Parliament had put out its views on the true state of the Ghanaian economy, posed five questions for Vice President Dr. Mahmud Bawumia, head of government economic management team.
In a breakfast meeting addressed by the Ranking Member of Finance Ato Forson asked, why an independent central bank with focus on price stability decides to reduce the monetary policy rate against its own research findings that US policy normalization is strengthening the US dollar and causing investors to move funds?
They further sought to know why an independent central bank, with a focus on price stability decides to reduce lower the policy rate in the face of dwindling net international reserves and a rising interest rate abroad?
“Why would an independent central bank, with focus on price stability decide to reduce the monetary policy rate in favor of growth, which has been projected to be higher than the previous year’s while the local currency is under pressure?”
Mr. Ato Forson further pointed that, clearly, an economy cannot be externally unstable and internally stable. “How can a rapid exchange rate depreciation be accompanied with a single digit inflation rate as captured by the posted macroeconomic indicators?”
And the fifth is, why would an independent central bank with a focus on price stability decides to lower the police rate in the face of excess liquidity in the banking sector emanating from banks increasing their minimum capital by over 100 percent, while the local currency is fast depreciating?
“The recent monetary policy easing by the Bank of Ghana is nothing more than populist approach and is a key factor fueling the recent exchange rate deprecation”.
Kwaku Sakyi-Danso/ghanamps.com