The Ranking Member of Parliament’s Economy and Development Committee, Kojo Oppong Nkrumah, has questioned whether the Bank of Ghana’s aggressive inflation-control measures could be undermining job creation and economic growth.
He has argued that monetary policy must strike a balance between controlling inflation and sustaining economic activity, warning against an excessive focus on headline inflation figures at the expense of the real economy.
During an engagement with Bank of Ghana officials, Mr Oppong Nkrumah raised concerns about the Central Bank’s inflation-targeting framework and its implications for businesses, employment and the living conditions of Ghanaians.
He drew attention to the Bank’s inflation target of 8 per cent, with a margin of plus or minus two percentage points, placing the acceptable range between 6 and 10 per cent.
Against this backdrop, he questioned the rationale for pursuing inflation levels below the lower boundary of the target range, particularly after the October 2026 rate fell to 5.5 per cent.
He asked whether maintaining inflation below six per cent could reflect an overly restrictive monetary policy stance, especially when businesses and households continued to face high operating costs and other economic pressures.
Mr Oppong Nkrumah maintained that the inflation target was not merely a statistical benchmark, but was intended to create an environment conducive to economic growth and employment.
In response, a Bank of Ghana official rejected the suggestion that the Central Bank was deliberately pushing inflation below its target range.
The official explained that the Bank’s projections indicated that inflation would gradually return to the established target band within the forecast period.
The official also attributed some of the unusually low inflation readings, including the reported decline to 3.2 per cent, to base effects arising from the elevated inflation levels recorded in the previous year.
According to the official, the Monetary Policy Committee (MPC) must remain cautious about emerging risks and ensure that its decisions support a gradual and stable movement of inflation towards the target.
However, Mr Oppong Nkrumah insisted that the Bank’s approach required further scrutiny, citing the International Monetary Fund’s latest review, which indicated that much of Ghana’s inflationary pressure was cost-driven.
He questioned whether the Bank’s reliance on demand-management measures, including liquidity sterilisation and other monetary policy instruments, could unnecessarily constrain economic activity without addressing the underlying causes of rising prices.
He argued that where inflation is driven largely by production costs, utility charges, rent and other supply-side pressures, measures aimed primarily at controlling demand may not adequately address the difficulties facing businesses and households.
The former Information Minister also sought to establish whether the Central Bank was engaging the government and advising relevant institutions on measures to tackle these cost-related pressures.
He specifically cited rising services inflation, rent and electricity costs, arguing that these continued to burden households and businesses despite the decline in headline inflation.
Responding, the Bank of Ghana official maintained that monetary policy decisions were guided by economic data, explaining that the Central Bank’s primary mandate in this area was to manage demand rather than directly address supply-side cost pressures.
The official further disclosed that the MPC had reduced the policy rate from 28 per cent to 14 per cent, stressing that its decisions were guided by the need to balance price stability with economic growth.
The Bank maintained that its inflation-targeting framework takes both price stability and economic growth into consideration, adding that the committee remained conscious of the potential impact of its decisions on the real sector.
Mr Oppong Nkrumah also questioned the disparity between the national headline inflation rate and figures recorded in some regions and sectors of the economy.
He observed that while headline inflation stood at 5.5 per cent, inflation in the Ashanti Region was approximately 9.8 per cent, while services inflation was about 8.3 per cent.
He questioned whether these variations explained why many Ghanaians continued to experience significant cost-of-living pressures despite the reported decline in overall inflation.
The MP argued that the credibility of economic indicators must also be assessed against the lived experiences of households and businesses, particularly when the cost of essential services and other basic expenses remains high.
