BoG's policy rate fails; 4-yr trend analysis reveals

Over the last four years, the Bank of Ghana (BoG) has raised its policy rate by 1,250 basis points, in a failed bid to contain inflation and rein in prices of goods and services in the country. 

Within the period, the Monetary Policy Committee (MPC) of the bank increased the rate at which it lends to commercial banks from 13.5 per cent in February 2012 to 26 per cent in February, 2016, the highest within the period and second highest in more than 10 years. 

Although the increments were meant to reduce the amount of money in circulation to suppress inflationary pressures, a GRAPHIC BUSINESS analysis reveals that the mechanism has not worked. 

It failed to achieve the desired results, with prices of goods and services defying the stern monetary stance to escalate, almost in the same magnitude as the policy rate was increased.

The trend analysis shows that as the policy rate was increased by 1,250 basis points, the average change in pric