The Bank of Ghana (BoG) has refuted claims of benefiting from high interest rates.

In a circular issued via its official handle on X, formerly Twitter, the Central Bank stated that the high interest rates raise the cost of open market operations, resulting in losses for the bank.

“Bank of Ghana does not benefit from high interest rates. On the contrary, high interest rates raise the cost of open market operations and lead to central bank losses. But it is a necessary price to pay to bring down inflation,” the Bank of Ghana said on May 18, 2024.

This response comes after businessman and the Agbogbomefia of the Asogli State, Togbe Afede XIV, accused the Bank of Ghana of unduly profiting from a policy of high interest rates in an opinion article.

Togbe Afede XIV shared that these “unnecessarily high” interest rates would only compound the woes of the local currency if measures are not taken to curtail the situation.

He predicted that the cedi’s performance will continue to experience pass-through effects on the price of goods and services and the cost of living in general.

“The truth is, all these variables are related. While the policy rate is an important tool of monetary policy, its misuse, as in our case, can have damaging effects. As long as interest rates are kept unnecessarily high, our currency, the cedi, will continue to suffer adverse consequences, with pass-through effects on other prices, including transport fares, utility tariffs, and fuel prices. Persistent cedi depreciation has been a key factor in our energy (including power) sector problems. We have always felt the need to adjust prices, not because consumers were not paying enough, but because the cedi has been depreciating,” Togbe Afede XIV wrote.

He added, “BOG concluded that their monetary policy rate decision underscores their commitment to balancing economic stability amid persistent ‘inflationary risks’ and supporting the sustainable growth of the economy. But economic stability and sustainable high growth will remain elusive as long as interest rates stay astronomically high.”

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— Bank of Ghana (@thebankofghana) May 18, 2024