The unhinged performance of the cedi within the first quarter of recent past years has left many economists, analysts, pundits and even the Bank of Ghana (BOG) bemused about a possible repeat in 2016.
Similar to the preceding year, the volatility in cedi performance has been relatively low towards the end of this year after the shoring up of the central bank reserves with the US$1.8 billion cocoa syndicated loan and US$1 billion Eurobond among others.
Specifically, the cedi to a US dollar has hovered between GHC3.70 to 3.80, averagely GHC5.70 to the British pound and between GHC4.0 to 4.32 to the Euro within the past three months. Thus, the BOG is poised to further increase the monetary policy rate (MPR) next year to consolidate the current gains recorded in the cedi.
However, a careful analysis of current statistics reveals that a further hike in MPR may rather fuel the current high cost of living, skyrocket the cost of borrowing way above our peers and stifle private investment growth needed to enhance growth in total economic output and employment.
GN Research analysts, therefore, are calling on the managers of the economy to rather consider expansionary fiscal policies like diversification and value addition to our traditional exports, protecting of local industries and creating of suitable environment for businesses to thrive among others instead of the persistent reliance on tighter monetary policies to save the domestic currency.