The Ranking Member of Parliament’s Economy and Development Committee, Kojo Oppong Nkrumah, has questioned whether the Bank of Ghana’s aggressive efforts to reduce inflation could be undermining job creation and economic growth.
He cautioned against excessive emphasis on lowering headline inflation at the expense of economic activity, employment and the living conditions of Ghanaians.
Speaking during an engagement with officials of the Bank of Ghana, the former Information Minister questioned the central bank’s inflation-targeting framework and its implications for businesses and households.
He noted that the Bank’s inflation target of eight per cent, with a margin of two percentage points on either side, provided an acceptable range of six to 10 per cent.
With headline inflation declining to 5.5 per cent in October 2026, Mr Oppong Nkrumah questioned whether continued efforts to reduce inflation below the lower boundary of the target range could result in an unnecessarily restrictive monetary policy stance.
He maintained that inflation targeting should not be treated merely as a statistical exercise but as a framework for promoting sustainable economic growth, employment and improved living standards.
Cost Pressures Persist
Mr Oppong Nkrumah also questioned the effectiveness of monetary policy measures in addressing inflation driven largely by production costs and other supply-side pressures.
Referencing the International Monetary Fund’s latest assessment of Ghana’s inflation dynamics, he argued that measures such as liquidity sterilisation could constrain economic activity without necessarily addressing the underlying causes of rising prices.
He cited utility tariffs, rent and service charges as major expenses that continued to burden businesses and households despite the decline in headline inflation.
“Where inflation is largely driven by production costs, utility charges, rent and other supply-side pressures, measures aimed primarily at controlling demand may not sufficiently address the challenges confronting businesses and households,” he argued.
He consequently sought clarification on the Bank’s engagement with government and other institutions responsible for addressing structural and supply-side pressures in the economy.
BoG Defends Monetary Policy
Responding, a Bank of Ghana official rejected suggestions that the central bank was deliberately seeking to push inflation below its established target range.
The official explained that the Bank’s projections indicated inflation would gradually return to the target band of six to 10 per cent within the forecast period.
According to the official, some of the unusually low inflation readings reflected base-drift effects associated with the high inflation levels recorded in the previous year.
The official maintained that the Monetary Policy Committee remained cautious about emerging inflationary risks and was committed to ensuring price stability.
The Bank also explained that monetary policy was primarily designed to manage demand and could not directly resolve inflation arising from production costs and other supply-side factors.
It cited the reduction in the monetary policy rate from 28 per cent to 14 per cent as evidence of its efforts to balance inflation control with support for economic growth.
Regional Inflation Disparities
Mr Oppong Nkrumah further questioned whether the national inflation figure adequately reflected the cost pressures confronting households and businesses across the country.
He cited disparities between the national headline inflation rate of 5.5 per cent and higher inflation recorded in some regions and sectors.
According to him, inflation in the Ashanti Region stood at approximately 9.8 per cent, while services inflation remained around 8.3 per cent.
He argued that these differences helped explain why many Ghanaians continued to experience rising living costs despite the significant decline in national inflation.
The Ranking Member maintained that economic indicators must be assessed alongside the practical experiences of households and businesses, particularly where essential services and operating costs remain high.
He emphasised that monetary policy should ultimately contribute not only to price stability but also to economic expansion, job creation and improved living standards.
