105TH MEETING OF THE MPC OF THE BANK OF GHANA

 

MPC-Press-Release-March-2022

Summary-of-Economic-and-Financial-Data-March-2022

Summary-of-Economic-and-Financial-Charts-March-2022

 

THE MONETARY POLICY COMMITTEE [MPC] OF THE BANK OF GHANA HELD ITS 105TH MEETING LAST WEEK. THAT WAS ONE WEEK EARLIER THAN PLANNED, BECAUSE OF THE EXTRAORDINARY GLOBAL CIRCUMSTANCES. FOLLOWING IS A BRIEF ANALYSIS OF THIS MEETING. AS USUAL, YOU CAN DOWNLOAD THE REFERRING DOCUMENTS FROM THE TOP OF THIS ARTICLE.

THE TIMES ARE DIFFICULT, THAT ONE EVERYBODY KNOWS. THE COVID-19 PANDEMIC IS NOT YET OVER, THE RUSSIA-UKRAINE CONFLICT HAS ADDED WOES. BOTH HAVE INFLUENCED THE GLOBAL ECONOMY SEVERELY. GHANA IS NO EXCEPTION, AND THAT ONE THE MPC OF THE BANK OF GHANA HAS ALSO REALISED. THEREFORE, THE COMMITTEE REACTED BY MOVING THE MEETING ONE WEEK EARLIER THAN PLANNED.

FURTHERMORE, THE INFLUENCE BOTH INCIDENTS HAVE ON THE GLOBAL ECONOMY IN GENERAL AND THE GHANA ECONOMY IN PARTICULAR DOMINATED THE SESSION. AND THE IMPACT IS STRONG: DID YOU KNOW THAT OVER 60 PERCENT OF ALL IRON ORE AND STELL PRODUCTS IMPORTED COME FROM RUSSIA AND UKRAINE? IT HAS ALSO AFFECTED WHEAT SUPPLY, AS BOTH COUNTRIES ARE MAIN SUPPLIERS OF THIS COMMODITY GLOBALLY.

CONSEQUENTLY, MOST OF THE  CURRENT ECONOMIC DATA ARE NEGATIVE. THAT ACCOUNTS FOR THE DEPRECIATION OF THE CEDI AS WELL AS THE INTEREST PAYMENT ON DEBTS. THE LAST ONE IS EVEN ELEVATED BY THE DECISION OF THE FEDERAL RESERVE BANK OF THE USA TO RAISE THE INTEREST RATES. THIS MAKES INTEREST PAYMENTS FOR FOREIGN DEBTS MORE EXPENSIVE, AND THAT AFFECTS ESPECIALLY EMERGING MARKETS.

BUT THERE ARE ALSO POSITIVE SIGNS: THE ECONOMIC ACTIVITIES IN THE COUNTRY INCREASED, ALTHOUGH AT A SLOWER PACE THAN BEFORE. AND PERHAPS MORE IMPORTANTLY, THE FINANCIAL SECTOR APPEARS TO BE RESILIENT, DESPITE ALL NEGATIVE INFLUENCES.

ONE NEGATIVE ASPECT DESERVES TO BE MENTIONED: BOTH BUSINESS AND CONSUMER CONFIDENCE HAVE SLIPPED. THE BUSINESS CONFIDENCE DID THAT MORE THAN THE CONSUMER CONFIDENCE, WHICH IS NOTHING SPECIAL. MOST OF THE TIMES, THE CONSUMER CONFIDENCE IS LAGGING BEHIND THE BUSINESS CONFIDENCE.

FURTHERMORE, WE CAN EXPECT THAT THE BUSINESS CONFIDENCE WILL RISE AGAIN. THAT IS IF THE ACTIONS OF THE BANK OF GHANA AND THE GOVERNMENT HAVE THE DESIRED EFFECT. AND I AM QUITE SURE THAT THEY WILL HAVE IT IN THE SHORT-TO-MEDIUM TERM. YOU CAN SEE SOME OF THE MEASURES PROPOSED BY THE BANK OF GHANA AT THE END OF THE PRESS RELEASE. THE GOVERNMENT HAS ALSO WORKED OUT SOME IDEAS WHICH WILL BE PUBLISHED PROBABLY TODAY.

WITH ALL THE ECONOMICAL RISK IN VIEW, THE MPC OF THE BANK OF GHANA INCREASED THE MONETARY POLICY RATE BY 2.5 PERCENT TO 17 PERCENT.

TO END THIS ARTICLE, ONE WORD TO THOSE WHO FOLLOW THE WORDS OF THE WORLD BANK DIRECTOR FOR GHANA. HE SAID THAT PEOPLE COULD SEE SIGNS OF ECONOMICAL DIFFICULTIES FOR GHANA IN 2019, BEFORE THE PANDEMIC. IT’S INTERESTING THAT HE SAYS THAT NOW, WITHOUT GIVING ANY DETAILS. WHERE DID HE GET HIS INFORMATION FROM? AND WHY DIDN’T HE SAY THAT IN 2019? EVEN IN 2020, ECONOMISTS SAID THAT GHANA IS ON THE RIGHT PATH.

WHATEVER IT IS, TOGETHER WE WILL GET THROUGH IT IF WE WORK TOGETHER…

SEE YA!

 

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