Increase Monetary Policy Rate by 100 to 150 Basis Points – IEA to BoG

The Institute of Economic Affairs (IEA) is asking the Monetary Policy Committee of the Bank of Ghana to increase the monetary policy rate by another 100 to 150 basis points to 20 or 20.5 percent.

This is ahead of the Central Bank’s MPC press conference on Monday, July 25 which might see the review of the MPR to stem the high level of inflation in the country.

Currently, the MPR, the rate at which the Bank of Ghana lends to commercial banks in the country, stands at 19 percent.

In a statement, the Director of Research at the IEA, Dr. John Kwakye believes the proposed adjustment “will narrow the inflation-PR gap, although the real PR will remain negative”.

“Further, the adjustment will signal the MPC’s unwavering commitment to fighting inflation and bringing it under control. The adjustment will also send the right signal to, and help calm, the markets,” the statement added.

Furthermore, the policy think tank explained that the next meeting of the MPC in September 2022, when the Committee would have had the benefit of two more inflation readings in July and August, would give it a clearer sense of the trend for it to reposition the PR accordingly.