Bank of Ghana (BoG) Governor Dr Johnson Asiama has revealed that the Monetary Policy Committee (MPC) pays close attention to the inflation outlook when setting the policy rate.
He said the committee’s decisions are guided by its assessment of where inflation is heading and the risks that could affect the outlook.
“This is why our decisions are always guided by the inflation outlook,” Dr Asiama said.
The Governor made the remarks during the inaugural MPC Educational Observership Programme, which brings Economics and Business students from tertiary institutions closer to the central bank’s monetary policy process.
Students from the University of Ghana’s Department of Economics and Business School were the first beneficiaries of the programme.
The initiative allows participants to engage with the Governor and reflect on MPC meetings.
It also provides an opportunity to understand how inflation expectations, emerging risks and differing views within the committee influence monetary policy decisions.
Dr Asiama explained that developments in the Middle East had influenced the committee’s recent decision to maintain the policy rate.
“Like some two months ago, I thought that we would go ahead with the easing cycle; however, fresh developments in the Middle East showed that end-of-year inflation will be affected, hence the need to hold the policy rate to try and check inflation from rising further in the coming months,” he said.
On how decisions are reached, Dr Asiama disclosed that the MPC now relies on majority decisions rather than consensus.
He explained that a consensus-based approach could limit members from fully expressing their individual positions.
“He stated that if you go for a consensus, more or less you are constraining everyone to fall in line,” the Governor added.
Dr Asiama also stressed the independence of MPC members, saying they are expected to argue their positions without being influenced by the Governor.
He further identified inflation expectations as an important consideration in determining the policy rate.
“We also have a team that goes out to do the necessary research, and all these things guide our policy rate decisions,” the Bank of Ghana Governor added.
