Professor Patrick Asuming, an economist and Senior Lecturer at the University of Ghana Business School, has called on the Bank of Ghana to focus on the pace of price increases. He stated this is more important than the current low headline inflation rate. Ghana's inflation rose from 3.20% to 3.70% and then to 5.30% over three months.
Professor Asuming delivered this warning during a NorvanReports and Economic Governance Platform X Space discussion. He emphasized that the speed of inflation's rise deserves careful policy attention. This is despite the overall inflation level remaining below the Bank of Ghana’s target range of 6.00% to 10.00%. The recent uptick raises questions about a potential reversal in the earlier trend of falling inflation.
This discussion fits into a broader context of Ghana's ongoing economic recovery. The nation has seen improvements in macroeconomic indicators such as inflation and exchange rate stability. However, the benefits have not fully reached many households and businesses. This disconnect highlights the challenges in translating macro-level gains into improved living standards. The Bank of Ghana faces pressure to balance economic stability with supporting business growth.
Professor Asuming noted, “Both the level and the direction of inflation matter.” He added that the current level is still below target, but the rate of increase should concern policymakers. His comments come before the Bank of Ghana’s next Monetary Policy Committee meeting. Analysts and businesses are watching to see if the central bank will hold or ease its policy rate from 14.00%.
The current inflation trend, according to Professor Asuming, stems mainly from supply-side pressures. He cited rising fuel prices due to Middle East geopolitical tensions as a key factor. Increased transport costs and global energy market uncertainty also contribute. These external factors mean higher interest rates from the central bank may not directly solve the problem.
Professor Asuming advised the Bank of Ghana to maintain a cautious stance. He stressed this despite growing calls from businesses for lower borrowing costs. He argued that Ghana’s 14.00% Monetary Policy Rate, while restrictive, is already much lower than previous domestic levels. Reducing it too quickly could weaken confidence and fuel expectations of further inflation rises. “The best central bankers are usually very conservative,” he said. “It is better to pause and observe than cut rates too quickly and later be forced to reverse course.”
This position places caution at the center of the policy debate. Businesses need lower lending rates for expansion and job creation. However, economists warn that early policy loosening could weaken the credibility gained from lower inflation. It could also compromise exchange-rate stability. The broader issue is that Ghana’s macroeconomic recovery is incomplete. Professor Asuming emphasized, “We should never think that we have arrived. We have not arrived.”
The recovery in macroeconomic data has not translated strongly into better living standards. This gap between macro stability and micro hardship is a major challenge for policymakers. Recent growth is largely from capital-intensive sectors like mining. These sectors contribute to output but do not create enough broad-based employment. This means GDP growth can occur without improving jobs or household incomes. The Bank of Ghana will need to carefully consider these factors in its upcoming decisions. These decisions will impact market confidence and the broader economic outlook for Ghana.