{"id":94871,"date":"2025-09-19T04:18:00","date_gmt":"2025-09-19T04:18:00","guid":{"rendered":"https:\/\/sotnews.agency\/?p=94871"},"modified":"2025-09-19T04:18:00","modified_gmt":"2025-09-19T04:18:00","slug":"the-real-economy-at-the-heart-of-interest-rate-choices-bogs-abradu-otoo-explains","status":"publish","type":"post","link":"https:\/\/sotnews.agency\/?p=94871","title":{"rendered":"The Real Economy at the heart of Interest Rate choices \u2013 BoG\u2019s Abradu-Otoo explains"},"content":{"rendered":"
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\n \t<\/i> Read Time:<\/span>2 Minute, 33 Second <\/div>\n\n <\/div>
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The Director of Research at the Bank of Ghana, Dr Philip Abradu-Otoo, has stressed that decisions on Ghana\u2019s key policy rate are anchored in the performance of the real economy, not just abstract financial models.<\/p>\n

\u201cThe things that go into arriving at a decision as to where to put the key policy rate of a central bank involve many factors. The committee in arriving at this decision discusses issues about the real sector of the economy,\u201d he said on Joy News\u2019 PM Express Business Edition<\/em>.<\/p>\n

He explained that the real economy means taking account of how both businesses and consumers are coping with ongoing adjustments. <\/p>\n

\u201cSo when we talk about the real sector of the economy, we are talking about how businesses are faring. We\u2019re talking about how consumers are also faring, and whether consumers are feeling the pinch of economic adjustment that is taking place, whether spending in the economy is at a level that is consistent with what the fiscal authorities, for instance, might expect, because the more we spend, the more the fiscal authorities are also able to extract revenues for development purposes.\u201d<\/p>\n

According to him, the Bank of Ghana relies on a broad set of data to measure the pulse of the real sector. <\/p>\n

\u201cThe Bank of Ghana has developed its own way of gauging how the real sector of the economy is performing, and periodically, the Ghana Statistical Service also comes out with figures on how the overall economy is performing. <\/p>\n

\u201cSo when we talk about the real sector of the economy, it\u2019s about what you and I are doing in the economy. It\u2019s about what businesses are doing in the economy. <\/p>\n

\u201cAnd we try to gauge the tempo of all these activities in the economy, imports, exports, all these things fit under the real sector of the economy.\u201d<\/p>\n

Inflation, he noted, remains a central part of the analysis. <\/p>\n

\u201cWe try to look at what is going on with respect to prices, inflation, you call it inflation. And then we try to even look at what the forecast of all these indicators looks like, especially for inflation, and are we getting close to our target?\u201d<\/p>\n

Dr Abradu-Otoo said the Bank also examines the health of the financial system itself. <\/p>\n

\u201cWe also look at even the banking sector, are they positioned in a way to help support growth in the economy, because the main job of the banks in the country is to support growth. Okay, so are banks well-positioned to deliver growth in the economy?\u201d<\/p>\n

He stressed that risks are always factored into the final decision. <\/p>\n

\u201cHaving done that, we then look at the risks surrounding all these things, and then we try to put all these things together in a framework to decide as to whether going forward, we should be confident about ourselves, and whether going forward we think that the risks are very minimal, and whether we can then reposition our key policy rate to deliver continued growth sustainably. I think the keyword is sustainable manner.\u201d<\/p>\n<\/div>\n

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