A senior lecturer at the University of Ghana, Professor Godfred Alufar Bokpin, says the Bank of Ghana’s (BOG) timing for the policy rate increment was ill-timed.

This comes in the wake of the Monetary Policy Committee (MPC) of the Bank of Ghana increasing the policy rate by 250 basis point to 24.5%.

This is the highest policy rate increase since 2017.

The rate hike means it will become more expensive to borrow from the banks, a situation that will push the cost of living and doing business in the country further up.

Speaking on Joy FM’s Top Story on Friday, Prof Bokpin stated that the measures taken by BoG has however saved the country economically.

According to him, if the BoG had not intervened by increasing the policy rate, the situation would have been much more ‘devastating’.

Prof. Bokpin added that the current fiscal system is in a mess, hence the focus must be directed there.

“We have said that where we are, the triggers are much more from the fiscal side and therefore there is a limit to how far you can deploy monetary policy largely of course to eliminate the demand related inflationary pressures but where I disagree with the Bank of Ghana is the timing of their policy rate adjustment that seem to lack in terms of positioning it to anchor inflationary expectation, I think we missed it,” he said.

He noted that the weak fiscal management and increasing public debt are other contributors to the poor economy, hence, the Bank of Ghana cannot be fully blamed.

He contended that politicians and other managers of the fiscal system should be held responsible for their failure to be fiscally disciplined in terms of their expenditures.

“We may be missing the point if we blame the Bank of Ghana so much and leave out the big elephant in the room which is the fiscal side where the political economy is dominant where politicians and managers of the fiscal side are to be blamed for the current mess that we are in.

“If you look at Bank of Ghana’s statement for the past year, you will see a certain posture of Bank of Ghana that suggests that they are unhappy with the way the fiscal side is being managed,” he explained.

Meanwhile, an Economist at the University of Ghana’s Institute for Statistical, Social and Economic Research (ISSER) Professor Charles Ackah disagrees with BoG’s increment.

Speaking on JoyNews’ PM Express on Thursday, he stated that the Bank of Ghana’s recent policy rate hike might be a measure in the wrong direction.

According to him, while increasing policy rates across the globe have been used during inflation caused by demand and supply disparities, Ghana’s inflation is rather structural and does not necessarily need a continuous increment of the policy rate.

He noted that even though the policy rate hike will reduce month-on-month inflation for the short term, in the medium to long term, the country may experience a shrinking economy and increased unemployment rates.

For this reason, he called on the Central Bank to reduce the policy rate instead in order to drive economic growth and employment. He further urged the government to “come out with fiscal stimulus to help people to increase their purchasing power to survive.”