The Director of Research at the Bank of Ghana (BoG), Dr. Philip Abradu-Otoo, has stressed the need for cautious monetary policy interventions in response to exchange rate fluctuations, cautioning that unchecked volatility threatens inflation stability, pricing behaviour, and the overall cost of living.
He made these remarks yesterday at the official launch of the University of Cape Coast (UCC) School for Development Studies Alumni Association, which also featured a roundtable discussion on the theme: “Monetary Policy Responses to Exchange Rate Volatility in Ghana: Implications for Cost of Living.”
According to Dr. Abradu-Otoo, although the central bank does not directly target the exchange rate, it closely monitors how movements in the cedi feed into inflationary pressures.
He noted that businesses frequently adjust their pricing models to account for currency swings, a practice that translates into higher costs of goods and services for consumers.
“The central bank is mandated to stabilize inflation, not necessarily the exchange rate. However, excessive volatility, whether appreciation or depreciation, creates uncertainty that undermines investment, competitiveness, and household welfare,” he said.
Dr. Abradu-Otoo urged policymakers to strengthen Ghana’s economic resilience by diversifying exports, building robust foreign reserves, and addressing long-standing structural challenges. He also emphasized the need to manage public expectations to prevent speculative behaviour that fuels inflationary spirals.
Adding to the discussion, Dean of the UCC School of Business, Prof. Samuel Kwaku Agyei, said persistent exchange rate instability, coupled with monetary policy responses, continues to shape the cost of living, consumer confidence, and the cost of doing business. He observed that while the Bank of Ghana primarily targets inflation, exchange rate shocks inevitably spill over into prices of essential goods such as food, utilities, and transport.
“In Ghana, even a tomato seller attributes price hikes to the dollar. This demonstrates how deeply exchange rate volatility affects everyday households,” Prof. Agyei explained.
He noted that while consumers experience the impact of currency fluctuations almost immediately, businesses often take up to six months to adjust, a lag that affects productivity, competitiveness, and job creation.
He also expressed concern that recent cedi appreciations have not led to lower market prices due to sticky pricing and reluctance among some producers to pass on cost savings.
On the sidelines of the discussions, the newly inaugurated president of the UCC School for Development Studies Alumni Association, Mr. Stephen Adjei, called on past students to rally behind their alma mater by building strong networks that drive mentorship, innovation, and national development.
“Our association aims to create a powerful platform for collaboration, lifelong learning, and digital innovation, while also raising funds to support postgraduate training, research, and capacity building for members and the school,” Mr. Adjei said.
The event brought together academics, policymakers, alumni, and business leaders, who all underscored the need for Ghana to design more resilient monetary and fiscal strategies that reduce the burden of exchange rate volatility on households and businesses.
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