Monetary policy rate: BoG’s explanation for mopping up excess liquidity not convincing -Togbe Afede XIV

Togbe Afede XIV, the Agbogbomefia of the Asogli State, has criticised the Bank of Ghana (BoG) over its recently maintained high monetary policy rate.

In a piece dated April 11, 2024, Togbe Afede XIV, described as unconvincing the BoG’s mopping up excess liquidity explanation for its high monetary policy rate.

According to him, supply side rather than demand side factors are at the root of Ghana’s inability to achieve sustained low inflation.

BOG’s “mopping up excess liquidity” explanation for its high monetary policy rate is not convincing. “Excess liquidity” presumes a certain optimal liquidity that has still not been defined. Secondly, supply side rather than demand side factors are at the root of our inability to achieve sustained low inflation. Thirdly, it is difficult to persuade people to save when they are struggling to make ends meet.”

Togbe Afede XIV asked why the International Monetary Fund (IMF) insisted on these high interest rates that have not worked for Ghana.

It is surprising therefore, that the IMF insists on these high interest rates that have not worked for us, the reason why we are engaging them for the seventeenth (17th) time!,” he pointed out.

On March 25, 2024, the Monetary Policy Committee (MPC) of the Bank of Ghana decided to maintain the policy rate at 29%, citing persisting upside risks to inflation.