BoG committed to stabilizing prices - BoG Governor

Governor of the Bank of Ghana (BoG), Dr Ernest Addison has indicated that the Bank is committed to ensuring price stability to create the enabling environment to support sustainable growth.

Price stability which is the Bank’s statutory mandate, according to him offers strong foundation to facilitate growth and development of the Ghanaian economy.

“Price stability and in this case achieving and maintaining a low and stable inflation regime reduces uncertainty and helps economic agents to extract information from relative prices thus leading to more efficient resource allocation and higher growth,” he said.

Dr Addison was speaking at a media training workshop for Journalists organised by the Journalists for Business Advocacy (JBA) on the theme “Monetary policy, tools for economic development.”

The primary objective of the BoG is to maintain price stability independent of instructions from government or any other authority.

This, he said has refocused the central bank on the major task of inflation control and indirectly away from the developmental activities which was the banks major focus of operation in the past.

The statutory mandate of the bank, according to him was firmly rooted in a resurgence of public interest in economic policy, heightened aversion for inflation and awareness of how much economic stability contributes to raising the standards of living of the people.

He said in conducting stabilization policy the BoG must maintain a strong commitment to keeping inflation and hence public expectations of inflation firmly under control, adding that keeping inflation under control may require that the central bank would be able to anticipate future movements in inflation and move pre-emptively.

Dr Addison said the development of a strong reputation and commitment to it by the central bank also serves to anchor the private sector’s expectations of future inflation.

“A well-anchored inflation means the public continues to expect low and stable inflation even if actual inflation temporarily deviates from its expected level, not only make price stability much the easier to achieve but also increases the central bank’s ability stabilize output and employment.”

He noted that inflation targeting cannot be effective in delivering low inflation without a responsible fiscal policy and effective prudential supervision to maintain financial stability. He said macroeconomic policy framework must, therefore, be coherent with monetary and fiscal policies complementing each other to drive the economy onto a low and stabled inflationary path.

Dr Addison, therefore, said BoG would continue to fine-tune work in that area to deepen transparency and promote credibility.

For his part, Mr Morgan Asiedu, Head of Human Resource and Legal of Ecobank said Small and Medium Enterprises (SMEs) play a major role in the economies of developing countries but are faced with many challenges such as the lack of access to credit and high cost of credit.

“It is common knowledge that these two constraints are fuelled by the informal nature of the SME sector, poor literacy on the part of most SME operators and inability to keep proper books of accounts.”

He applauded JBA for taking it upon themselves to raise the level of financial literacy among its members and SMEs in Ghana.

The two-day workshop is aimed at creating more awareness on monetary policy, promoting financial stability and the role of journalism in economic reporting.