Global oil prices could go up further – Prof Quartey backs BoG’s 14% policy rate

Economist Professor Peter Quartey has endorsed the Bank of Ghana's decision to keep its policy rate at 14%, considering rising global oil prices and ongoing inflationary risks. He believed the move was apt given the volatility in the global economy. "It’s certainly a good move because if you look at the threats to our macro economy, you realise global oil prices have been going up and are likely to go up," he noted.

Professor Quartey emphasized the unpredictability of oil prices, which present additional challenges for Ghana's economy. "We’re not sure what the near end is going to look like," he stated. He also highlighted other economic pressures, such as higher utility charges and fuel pump prices. "Inflationary threats are there, and you’ve seen utility increases, we’ve seen increases in fuel prices at the pump, etc.," he remarked.

In this context, Professor Quartey deemed the decision to maintain the policy rate as appropriate. "So it is just laudable, or it’s just ideal that you maintain the rate," he affirmed. However, he recognized that the Bank of Ghana might have opted for a rate increase to counteract global economic pressures. "It’s quite a difficult one.

I mean, if you really want to look at what is happening globally, you may want to hike the rate," he suggested. Yet, he warned that a rate hike could impose further challenges on businesses by raising operational costs. "But that would not be ideal for businesses, would not be ideal for the cost of doing business," he cautioned.

Professor Quartey believed the Bank of Ghana's present strategy enables it to observe conditions before making its next move. "And therefore, the bank is taking the approach of basically to watch the space a little bit and see how it comes out, and then we’ll take a decision," he explained. Ultimately, Professor Quartey backed the decision to retain the rate. "But I I think it’s certainly in the right direction," he concluded.