Although the Director of Research at the Institute of Economic Affairs (IEA) Dr John Kwakye has welcomed the reduction in the policy rate from 29% to 27%, he says he expects more cuts to follow.
The Monetary Policy Committee announced the cut in the policy rate to 27% on Friday, September 27 during the 120th MPC press conference in Accra.
Justifying the reduction, the Chair of the MPC, Dr Ernest Addison said that the domestic economy continues to recover.
He stated that in the assessment of the Committee, preliminary data since the last MPC meeting held in July 2024 indicates that macroeconomic conditions have generally improved.
Headline inflation has eased, and growth has `picked up. Fiscal policy implementation has been robust, providing impulse that is supportive of growth, while monetary conditions have remained tight and supportive of the disinflation process.
Headline inflation, since the first quarter, has declined for 5 consecutive months by 5.4 percentage points. Core inflation has also declined sharply over the same comparative period by 6.9 percentage points. These trends suggest that the disinflation process is on course. The latest
forecasts show that inflation will continue to ease towards the range target of 13-17 percent for the year and steadily track back towards the medium-term target of 6-10 percent by the end of 2025, barring unanticipated shocks. At the current juncture, the committee judged the risks to inflation outlook as fairly balanced.
In a post on is X platform reacting to this, Dr Kwakye, also an economist, said “I welcome the MPC decision to cut the PR from 29% to 27%. This was long overdue. I expect more cuts to follow. I am, however, disturbed by the pace of depreciation. From 4 to the $ to 16 now, the cedi has lost 75% of its value during the period. This is unacceptable! #SaveTheCedi.”
