Economist, Dr Adu Owusu Sarkodie, has called on government and the Central Bank to collaborate towards consolidating gains made towards easing inflation further downwards.

According to him, the recent policy rate cut by the Central Bank from 30% to 29% will enable businesses borrow at a much lower rate although the cut is marginal.

Speaking in an interview with GhanaWeb Business on January 29 after the BoG MPC announced its policy rate decision, Dr Adu Sarkodie said the move signals economic recovery on a positive trajectory.

“What many Ghanaians are now expecting is for inflation to trend downwards although the current figure [23.4%] remains high. It is the reason that the MPC adopted the policy rate cut in order to consolidate the gains made towards inflation while improving on the growth performance,” the economist said.

“I support the decision of the MPC to reduce the policy rate as the inflation rate still remains high. We also have to relieve businesses to borrow at a much lower rate as the policy rate impacts on the cost of lending for businesses. We are hoping this continues in the medium term to bring inflation down under control to the medium-term band of 8% ± 2 while the policy rate also trends downwards to 15%,” Dr Adu Sarkodie added.

The Monetary Policy Committee of the Bank of Ghana on January 29, 2024 cut the policy rate by 100 basis points from 30% to 29% for the first meeting of the year.

The decision is based on core inflation figures easing downwards while several factors have supported the disinflation process.

MA/NOQ