MPC Will Guard Against Inflation Before Boosting Growth – Analyst

Economic Analyst Emmanuel Boateng has indicated that the Bank of Ghana is likely to prioritise price stability over aggressive growth measures as its Monetary Policy Committee (MPC) continues deliberations.

Speaking on the market trends segment of the Business Breakfast on ZED 101.9FM, Mr. Boateng explained that while economic growth remains important, central banks typically place inflation control at the core of sustainable development.

“At this stage, the MPC is likely to prioritise price stability,” he stated.

According to him, inflation influences growth, just as growth trends can also shape inflation outcomes, noting that recent improvements in macroeconomic indicators and declining inflation created room for the central bank to reduce policy rates earlier.

“One of the reasons for the previous rate cut was the fall in inflation. So there is that bi-causal effect,” he explained.

However, Mr. Boateng cautioned that the current policy stance is expected to be more measured, particularly if inflationary pressures begin to rise again.

“If inflation is not checked, it erodes purchasing power, creates uncertainty, and ultimately undermines economic activity,” he warned.

He further noted that although lower interest rates can stimulate borrowing and investment, the MPC is unlikely to cut rates aggressively in the face of rising inflation.

“The Committee will be cautious about cutting rates too quickly if inflation is trending upwards,” he stated.

Mr. Boateng further emphasised that the central bank is not neglecting economic growth entirely. He highlighted that earlier policy rate reductions have already injected some stimulus into the economy, while improved liquidity conditions continue to support business activity.

“The current focus is more about maintaining stability rather than introducing additional stimulus,” he said.

Mr. Boateng indicated that the MPC is attempting to strike a balance between supporting growth and controlling inflation, stressing that in periods of uncertainty, stability often takes precedence over expansionary policies.

The analyst also stressed that exchange rate stability will play a decisive role in the upcoming decisions of the Bank of Ghana Monetary Policy Committee, particularly in the face of rising global uncertainties.

Mr. Boateng explained that the Ghanaian cedi remains a critical factor in inflation dynamics, especially given the country’s heavy reliance on imports.

“The cedi plays a central role in driving inflation in an import-dependent economy like Ghana. If the currency weakens significantly, it raises the cost of imports such as fuel, food, and industrial inputs, which ultimately feeds into higher inflation,” he noted.

According to him, this is why central banks typically place a premium on maintaining currency stability, particularly during periods of external shocks.