Speaking at a press conference in Accra on Wednesday, March 20, 2019, Mr. Forson urged Dr. Bawumia to among others explain why an independent central bank, with a focus on price stability, will lower the policy rate in the face of dwindling net international reserves and a rising interest rate abroad.
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Here are the Minority’s 5 strong questions for Bawumia to digest
The Minority Spokesperson on Finance, Ato Forson has asked Vice President, Mahamudu Bawumia to answer some five questions about the economy.
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Meanwhile, head of the economic management team, Dr. Bawumia is expected to brief Ghanaians on the state of the economy at a town hall meeting on April 3, 2019.
Below are the Minority's five questions:
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Question 1: Why would an independent central bank with focus on price stability decide to reduce the monetary policy rate against its own research findings that US policy normalization is strengthening the US dollar and causing investors to move funds away from emerging economies and that upward adjustments in domestic prices of petroleum products are likely to affect transport and utility prices?
Question 2: Why would an independent central bank, with a focus on price stability, decide to lower the policy rate in the face of dwindling net international reserves and a rising interest rate abroad?
Question 3: Why would an independent central bank with focus on price stability decide to reduce the monetary policy rate in favour of growth, which has been projected to be higher than the previous year’s, while the local currency is under pressure?
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Question 4: Why would an independent central bank with a focus on price stability decide to lower the policy rate in the face of excess liquidity in the banking sector emanating from banks increasing their minimum capital by over 100 percent, while the local currency is fast depreciating?
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Question 5: Clearly, an economy cannot be externally unstable and internally stable. How can a rapid exchange rate depreciation be accompanied with a single digit inflation rate as captured by the posted macroeconomic indicators?
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