Economists divided over possible outcome of policy rate meeting

The Monetary Policy Committee (MPC) of the bank of Ghana is expected o announce a new policy rate on Friday, and already, there is high expectation. The meeting which will be the 75th is expected to review developments in the economy, and make recommendations for the way forward. Subsequently, a decision on the policy rate by the committee is also expected to be announced. For economist Dr. John Gatsi, the MPC is likely to maintain the rate at the current 25.5 percent. “We have seen the inflation rate go down, but that is not the only indicator, which gives the strength to reduce the policy rate,” he emphasized. “Prices of fuel have been unstable; we have also seen intermittent power outages and other factors that do not give the encouragement to reduce the policy rate.” But economist courage Kinsley Martey disagrees. He believes the key indicators have been positive, and that can trigger a downward review of the rate by the   MPC. “I think the central bank is likely to review downwards the policy rate. This is because all the key indicators have pointed to an improved inflation outlook. “If you consider that fact the cedi is also recovering its lost value and putting together some other factors, you realize the outlook for inflation can accommodate some decline in the policy rate”. Meanwhile, businesses anticipate a reduction in the current policy rate which stands at 25.5 percent.

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