Senior Lecturer at the Economics Department of the University of Ghana, Dr. Priscilla Twumasi Baffuor has objected to claims that the inflation targeting policy by the Bank of Ghana is not the best for controlling price hikes.
Speaking as a panelist at the KPMG Post Budget Forum in Accra, Dr. Twumasi Baffuor defended the inflation targeting regime, saying, there is no data to back the claims in the past few years when the regime was being implemented.
She disagrees with the call for the Monetary Policy Committee to halt the inflation targeting framework to control inflation
According to her, the inability of the interest rate hike to arrest the high rate of inflation indicates that the inflationary trend being experienced currently is not a monetary problem.
Dr. Twumasi therefore called for an empirical research to proof otherwise or another solution found that can support the inflation targeting by the Central Bank.
“With Inflation targeting, the mandate is price stability, thus keeping an eye on inflation and a lot of debate has gone on with regards to whether that is the right strategy to go for as a country. I believe that nothing shows that it is not working. if you look at the data until recent times when the gap started widening a bit and it tells us that inflation is not solely a monetary issue… it is not because there is too much money in the system.
“But the reality is that if the Bank of Ghana does not control it, it could have been worst because when you track the data to see instances where price started rising, the policy lagged a bit and the inflation rose faster than the month when they [BoG} stepped in. So I believe there is no reason to bash the targeting regime that we are on but probably there should be some rigorous empirical work to know that in Ghana although we are tackling inflation and want to keep it low, is it necessary for inflation to be single digit before we say we are there”. she added.
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