The Private Enterprise Federation has taken a swipe at the Bank of Ghana’s Inflation Targeting Frameworks, saying, it has not been able to tame inflation as expected.

According to its Chief Executive, Nana Osei Bonsu, the technique or practice of increasing policy rate anytime inflation goes up has not been helpful.

Inflation skyrocketed to 27.6% in May 2022, consequently pushing interest rates so high.

Speaking to Joy Business, Nana Osei Bonsu, said the Central Bank should adopt a different approach in bringing down the rate of inflation.

“Whenever there is inflation and you increase the policy rate, it doesn’t bring inflation down. It actually increases inflation because the banks cost of money is going to go high, private sector cost of doing business is also going to go high”.

“So things are going to go cyclical angle. What we have to do now is how do we tame the inflation”, Nana Osei Bonsu mentioned.

He expressed worry over the continuous dependency on foreign materials for production in the country, citing an example of over reliance on cement for building instead of brick.

“The dependency on foreign raw materials. Now housing, every Ghanaian wants to own housing…that is the ambition. Why do we continue to use clinker, cement for building. We can use clay and convert into bricks. Go to overseas, 90% of the countries are using bricks, why can’t we”, he pointed out.

He further said “so if we depend on local raw materials to create the housing, to build our roads, the dependency on foreign exchange to buy the clinker, to buy the cement will cease and therefore will bring down the prices on the market.

In May 2022, the rate of inflations for Transport (39.0%), Household Equipment and Maintenance (33.8%), Housing, Water, Gas and Electricity (32.3%) and Food and Non-Alcoholic Beverages (30.1.6%) were higher than the national average of (27.6%).

As a result of the rising inflation, interest rates have also shot up significantly, from about 13% in March 2022 to over 24% presently.