The Chief Executive Officer of the Ghana National Chamber of Commerce and Industry (GNCCI), Mark Badu Aboagye, says Ghana’s current policy rate is not aligned with prevailing inflation trends, arguing that the gap is affecting borrowing and business activity.
Speaking at the quarterly Economic Outlook on Channel One TV on Monday, April 27, on the theme “Taking Stock – Ghana’s Economic Turnaround: What Changed & What Comes Next?”, he said the current macroeconomic setup reflects a mismatch between key indicators.
“To see inflation at 3.2% and policy rate at 14% for me, there is a misalignment somehow,” he said.
He explained that the wide gap between inflation and the policy rate results in a high real interest rate environment, which discourages borrowing by businesses.
“It means the real rate is very high, and when the real rate is very high at that level, it doesn’t enhance borrowing,” he said.
Mr Badu Aboagye noted that inflation plays a central role in shaping other macroeconomic variables, stressing that improvements in inflation should be reflected across the broader financial environment.
“In fact, inflation is a major driver of all the indicators that we are talking about. They are all related, so if you see inflation coming down, then other important variables should be lower,” he said.
He added that in his view, there is room for further downward adjustment in interest rates, aligning with the central bank’s own inflation outlook.
“I believe we can do less than 10. The Governor said that that is his target that we will do less than 10,” he noted.
Mr Badu Aboagye maintained that bringing the policy rate closer to inflation trends would help improve credit conditions and support private sector growth.
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