Monetary Policy and The Economy Reform

Monetary policy all over the world have been pursued together with fiscal policies to ensure economic progress is achieved while fiscal and other macroeconomic challenge are address. These policies and strategy have been dynamic in line with global trend in order to be relevant. Monetary policies involve the use of difference measures with aims of regulating the values, supply and the cost money in consonance with the expected level of economic activity.The main objective is to ensure price stability and maintenance of balance of payment equilibrium while creating employment and sustainable development.
 
   For instance, in the history of Ghana economic development, the introduction of policy rate by Bank of Ghana as a central policies tool started in 2002.The rate has been peaked at 27.5%  since  2003 and declined to 12.5% in August,2007. After these period,it increases to 18.5% in september,2009 and decline to 12.5% gain in november,2011. For the past years, it has peaked  at 26% where it has remain unchanged for the greater part of the years until November 2016 where it was reduce to 25.5% and decline further to 23.5% in March,2017.

   In the domestic font, inflation continues to decline from 17.5% in september 2016 to  13.2% in February,2017.This was partially due to the IMF extended credit facility granted which required central bank to have tight monetary system. Though inflation has been declining, achieving medium term target of 8% was the key on the determination of the monetary policy rate.

  The cedis depreciated in january on average 0.08% and 0.24% in february against major currency  trading (USD). As at 4th week of March,, the cedis has gain its value on the average of 7% against USD even though the cedis has recorded a marginal gain, this was partially due to the issuance of One billion cedis bond and auction of  $120 million for the first quarter of 2017 by central bank

   Another development was the fiscal policy of the new gpvernment.Although the budget is explainatory, the extent of the government involvement in term of expenditure is limited by tax reform aimed at encourage private spending to crete jobs and growth the economy.

   Despite all the challenging facing the economy, the current budget propose to the parliament and reduction in monetary policy rate by bank of Ghana have inspired hope in the economy through tax incentive given to business to invest, expand and provide sustainable job while government use limited resources  available to invest in the critical sector of economy toward the production driven sector performances.

 Given the falling inflation trends,the performance of cedis during March,2017, reduction of monetary policies rate to 23.5% and issuance of bond and auction of $120 million. The upsurge  on investor confidence and general positive outlook for the economy


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