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Business News of Friday, 22 October 2021

Source: www.ghanaweb.com

Economist calls for scaling back of coronavirus interventions to reduce inflation

Inflation for September 2021 recorded its highest at 10.6% Inflation for September 2021 recorded its highest at 10.6%

COVID-19 interventions have largely served their purpose

• Inflation for September 2021 recorded its highest at 10.6%

• The COVID-19 pandemic has shattered global economies


A move to reverse COVID-19 related interventions introduced by the Bank of Ghana following the onset of the pandemic will go a long way to reduce the rising inflation rate in the country.

This is the view of Senior Research Economist with Databank, Courage Martey.

In an interaction with Citi Business News, he explained that the raft interventions measures to cushion the Ghanaian economy from the adverse impact of the pandemic have all largely served their intended purpose hence they need to scale them back.

“A very important point that must be noted is that in the recent Monetary Policy Committee meeting, for the first time, it indicated that it would leave the COVID related monetary support for now and what it tells me is that, it is only a matter of time before they start rolling back or scaling back the COVID-19 related interventions,” Martey said.

He continued, “So. if inflation continues above the upper band as we have it right now towards the end of the year, we could start to see the central bank, scaling back the COVID-related interventions and leaving the policy rate hikes for the longer-term outlook.”

“But immediately what I think could be done, would be to start looking at scaling back, the COVID related intervention,” the Databank economist added.

Martey further points that these interventions following a year after they were introduced are contributing factors to the increasing rate of inflation.

Meanwhile, apart from cutting down the monetary policy rate from 16 per cent to 14.5 percent in March 2020, the Bank of Ghana further reduced the Primary Reserve Requirement for banks from 10 percent to 8 percent.

The central bank in addition to measures to provide liquidity to banks to support critical sectors of the economy reduced the Capital Conservation Buffer for banks from 3.0 percent to 1.5 percent.

According to the Ghana Statistical Service, the country in September 2021 recorded the highest inflation rate since the COVID-19 pandemic at 10.6 percent.

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