Bank of Ghana Maintaining policy rate at 26% does not signal confidence in the economy - Economist

The BoG on Monday maintained the policy rate at 26% for the fourth conservative time, citing a decline in inflation and the stability of the cedi.

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Dr. Abdul Nasir Issahaku , Governor of BoG play

Dr. Abdul Nasir Issahaku , Governor of BoG

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Economist Dr. Godfred Bokpin has criticised the Bank of Ghana's (BoG) decision to maintain the  policy rate at 26%, saying it does not send the right signal to investors that the economy is on the path to recovery.

The BoG on Monday maintained the policy rate at 26% for the fourth conservative time, citing a decline in inflation and the stability of the cedi.

READ MORE: BOG maintains policy rate at 26%

Governor of BoG, Dr. Abdul Nasir Issahaku emphasized the 26% policy rate is a true reflection of the current happenings in the economy.

But Bokpin believes Ghana missed the opportunity to court a business community and be pragmatic in how we manage the economy.

According to him, we may be selling the future of the economy in the name of inflation targeting.

"I think we have missed the opportunity to court the business community and be a bit pragmatic about how we look at our economy even as we transition to a more forward looking inflation targeting region," Bokpin told Joy FM. "You know at the end of the day, maintaining the policy rate does not signal the kind of confidence that we want to see in the economy or in the hope that the economy is recovering."

He said:"a marginal reduction would have sent the right signal to market that things have picking up even though it is a bit slow then in that case we would be able to galvanise activity at the real sector."

"Otherwise, we may be selling the long term future of this country all in the name of trying to contain the threat of inflation," he added.

READ MORE:BOG to announce Monetary Policy Rate

However, Dr. Issahaku maintained at a news conference that until the disinflation process is grounded, it will be too soon to start reducing the policy rate.

"Until the disinflation process is really well grounded i think it will be too soon to start reducing policy rate especially that as i mentioned earlier on the inflation path and time horizon has moved outward and with this cannot at all rate be reduce in policy rate."