Legal expert questions effectiveness of BoG’s inflation-targeting framework

Founder and partner at AB and David Africa, David Ofosu-Dorte, has raised concerns about the Bank of Ghana’s (BoG) inflation targeting regime, questioning its effectiveness in addressing the country’s persistent inflation problem. Ofosu-Dorte’s critique comes amidst the central bank’s claims of success in reducing inflation from 54% in 2022 to 22.8%.

Speaking on the need for a re-evaluation of Ghana’s monetary and fiscal management, Ofosu-Dorte argued that inflation targeting alone would not solve the country’s inflationary issues. He highlighted that an economy with interest rates exceeding 20% cannot be stabilized solely through monetary policy, challenging economists to debate the merits of inflation targeting in the current economic climate.

His comments arrive as the Bank of Ghana receives praise from the World Bank Group for its efforts in economic reforms. The latest Country Policy and Institutional Assessment (CPIA) report from the World Bank identified BoG as one of the few African central banks that had successfully implemented reforms, enhancing its independence.

BoG Governor, Dr. Ernest Addison, welcomed the commendation, viewing it as a positive reflection of the central bank’s work. However, Ofosu-Dorte’s critique suggests that despite these accolades, there may still be significant challenges ahead in fully addressing Ghana’s inflation woes.