An economic consultant, Mr Kwamena Essilfie-Adjei has challenged the Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) to prove that an increase in the prime rate leads to a reduction in inflation.

The call follows an increase in the prime rate on Monday from 14.25 to 16 per cent. The MPC has defended its decision saying the prime rate is a major determiner of inflation in the country but Mr Essilfi Adjei thinks otherwise.

He said the MPC must take time to find out the actual cause of the excess demand which could be leading to high inflation.

Mr Essilfie-Adjei said the committee must “look behind it to ascertain if the excess demand is as a result of structural rigidity or perhaps some constraints in the supply chain.”

According to him, the committee has over the years taken the best decisions to establish a stable economy but has a little more to do when it comes to stabilising inflation.