Policy rate hike ideal, but would hurt businesses amid rising fuel, utility costs – Prof Quartey

Economist Professor Peter Quartey has endorsed the Bank of Ghana's decision to keep the policy rate at 14%. This stance is due to the existing inflationary threats facing the Ghanaian economy. Speaking on Joy News’ PM Express Business Edition, Professor Quartey highlighted the rising global oil prices and the uncertainty surrounding their future development.

He explained, "Well, 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." Prof Quartey also pointed out other inflationary pressures such as increases in utility charges and fuel prices. "So, and inflationary threats are there, and you’ve seen utility increases, we’ve seen increases in fuel prices at the pump, etc.", he said.

While the decision to keep the rate unchanged is laudable and ideal, Professor Quartey acknowledged that the global economic situation could support a higher policy rate. He noted, "It’s quite a difficult one. If you really want to look at what is happening globally, you may want to hike the rate, but that would not be ideal for businesses, would not be ideal for the cost of doing business."

Prof Quartey emphasized that the Bank of Ghana is adopting a cautious approach by monitoring the situation before making its next move. He stated, "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."

In conclusion, Professor Quartey endorsed the Bank of Ghana's decision to maintain the policy rate, deeming it to be in the right direction.