Bank of Ghana Raises Policy Rate to 28%: A Lesson for the Finance Minister? – Dr Gideon Boako
Dr. Gideon Boako, Member of Parliament for Tano North, has penned a scathing critique of the Finance Ministry’s handling of the economy. The Bank of Ghana’s recent decision to raise the policy rate by 100 basis points to 28% has exposed the Ministry’s “artificial” attempts to manipulate T-bill rates for propaganda purposes.
Boako argues that the Finance Ministry’s efforts to control both price and quantity in the T-bill auction market were misguided, resulting in rates plummeting from 29% to as low as 15% for 91-day bills. He also questions why the Central Bank didn’t take more aggressive measures to manage excess liquidity and ensure price stability.
The latest Monetary Policy Committee (MPC) release reveals plans to introduce a 273-day instrument to strengthen the existing sterilization toolkit, which Boako believes will aid the disinflation process. However, he emphasizes that the Finance Minister must take a cue from the Central Bank’s actions and prioritize macroeconomic management to ensure national financial stability.
The ongoing policy incoherence between the Finance Ministry and the Central Bank raises concerns about a lack of coordination. Boako stresses that fiscal and monetary authorities must align to prevent economic management from suffering. The recent undersubscription of T-bills in the last two auctions serves as a stark reminder of the need for policy cohesion.
In conclusion, Boako’s critique serves as a wake-up call for the Finance Ministry to reassess its economic strategies and prioritize national financial stability.
