The Chairperson of Parliament’s Public Accounts Committee (PAC), Hon. Abena Osei Asare, has appealed to the Bank of Ghana (BoG) to narrow the widening gap between the monetary policy rate and the current inflation rate, which stands at 5.4 percent.
She observed that with inflation now below the central bank’s medium-term target of 8 percent ±2, there is sufficient room for policy adjustment to ease borrowing costs and stimulate economic activity.
Hon. Osei Asare made the call on Monday during a sitting of the Public Accounts Committee convened to consider the Auditor-General’s Report on the Public Accounts of Ghana—Ministries, Departments and Other Agencies—for the year ended December 31, 2024.
Expressing concern over the sharp divergence between the policy rate and the prevailing inflation level, the PAC Chair urged the central bank to consider easing its monetary stance.
“The difference between the policy rate and inflation of 5.4 percent is quite huge. Now that you have gone below your target, maybe you need to ease those monetary policy operations so that things can balance a bit,” she stated.
She emphasized that a relaxation of monetary conditions would provide critical relief to households and businesses struggling under high borrowing costs.
“We support you to make sure that you ease the burden on the people we represent. Parliament will gladly support any move that helps balance the economy now that you’ve hit your targets,” she added.
Responding to the concerns, the Governor of the Bank of Ghana, Dr. Johnson Pandit Asiama, assured Parliament of the central bank’s commitment to prudent and responsible monetary management as inflation continues to trend downward.
He disclosed that credit conditions are already improving, citing a significant decline in lending rates.
According to him, as at the Bank’s last Monetary Policy Committee (MPC) meeting at the end of November, average lending rates had dropped to 22.2 percent, compared to 30.5 percent during the same period last year.
“So, on the contrary, things are actually getting better. Lending rates are on the decline,” Dr. Asiama noted.
He further revealed that the Ghana Reference Rate (GRR) has fallen sharply and currently stands at approximately 15 percent, reinforcing the improving credit environment.
“So, Madam Chair, we are on the bend. The lending activity by the banks is following the general stabilization and the decline in other interest rates. We hope to see more of this as we go on,” he said.
Dr. Asiama explained that multiple monetary policy transmission channels are working together to support the economy, including the exchange rate channel, the interest rate channel, the lending channel, and the expectations channel.
He noted that the exchange rate channel remains particularly strong in Ghana, with rapid pass-through effects, which contribute to the country’s current macroeconomic stability.
“We believe that all these channels are working in unison, and that’s why we are seeing the progress that we are making,” the BoG Governor said.
Beyond traditional policy tools, Dr. Asiama disclosed that the central bank is actively engaging commercial banks to support the real sector, particularly exports and market expansion for Ghanaian businesses.
He added that foreign-owned banks, especially those from South Africa and Nigeria, are well-positioned to assist local businesses in accessing new markets.
“We will continue to push hard on these fronts, in addition to the traditional monetary policy making that we are doing. We are supporting the government to a great extent,” he assured Parliament.
