only until the diffusion of e - commerce has stabilised. and lower imported inflation thanks to globalisation should eventually lead to higher prices elsewhere, as disposable income increases and the levels of wages and other costs equalise across countries. so there is no reason why any of these structural changes should make our current price stability objectives unobtainable. they may create global disinflationary forces, but those forces are transitory in nature. what can affect our objective, however, is if those forces have a persistent impact on inflation – which is to say, if they become embedded in inflation dynamics and inflation expectations. but that is not a structural issue ; it is about the credibility of monetary policy in anchoring inflation expectations. this brings me to the second line of argument against active monetary policy. most empirical results that find ageing is disinflationary have focused on japan, as its transition from aging society to aged society is one of the fastest ( see, for example, jong - won yoon, jinill kim & jungjin lee, 2014. “ impact of demographic changes on inflation and the macroeconomy ”, imf working papers 14 / 210, international monetary fund ). however, a recent bis working paper by juselius and takats ( 2015 ) contradicts the prevailing view : looking at low - frequency correlations, they find that a larger share of young or old cohorts is associated with higher inflation, while a larger share of working - age cohorts is correlated with lower inflation. this highlights how difficult it is to quantify the impact of this structural factor on inflation. see mikael juselius & elod takats, 2015. “ can demography affect inflation and monetary policy? ”, bis working papers 485, bank for international settlements. inflation as a global phenomenon has been documented e. g. by matteo ciccarelli and benoit mojon, 2010. “ global inflation ”, the review of economics and statistics, 92 : 524 – 535. bis central bankers ’ speeches the response to too low inflation there are some who argue that, so long as we are experiencing mainly positive global supply shocks, there is no need for central banks to be overly responsive. we can simply redefine the medium - term horizon over which price stability is maintained and “ wait it out ” until inflation returns to our objective. indeed, the reason central banks do not define the medium - term as a period of calendar

, have been shaped by development strategies adopted over the period. bank of ghana is no exception and the bank ’ s policies and activities have been shaped by changing political and economic conditions over the years. in the foundational years, the bank of ghana ordinance ( no. 34 ) of 1957 clearly defined the role of the bank to suit the prevailing circumstances which characterized optimism and aspirations associated with the country ’ s attainment of independence. consequently, the bank of ghana pursued proactive policies to foster the credit system, creating financial institutions as growth - promoting vehicles, while exercising the fundamental responsibilities of currency management and acting as the government ’ s banker. since then, the bank has epitomized and embraced new thinking on monetary policy formulation, driven by those privileged to serve the bank at the highest level — some of whom are with us here now. 6. ladies and gentlemen, it has been sixty years and the bank is now operating in a different statutory and macroeconomic context. to respond to changing domestic conditions and developments in central banking and monetary policy globally, the bank of ghana act 2002, act 612, which was passed to bestow operational independence on the central bank, was amended in 2016 to further reinforce and re - focus its policies and mandate on price and financial stability. these two pieces of legislation marked a paradigm shift in the bank ’ s operations and would continue to define the role of the bank of ghana going forward. 7. on monetary policy formulation and implementation, the bank officially adopted inflation targeting framework a decade ago, with the monetary policy rate as the main policy tool. over the past decade, the framework has helped lower inflation volatility. prior to the implementation of the framework, inflation was highly volatile and hovered above 40 percent, but has since declined significantly and edging closer to the medium - term target of 8±2 percent. the it framework introduced some clarity and transparency into the monetary policy formulation and helped anchor inflation expectations. 8. this aside, ghana is a small open economy and hence vulnerable to adverse developments in the global economy, especially in the international commodity markets. these vulnerabilities transmit to the domestic economy through the trade and financial sectors, posing major challenges to the macroeconomic fundamentals. for instance, the past decade has witnessed significant turmoil in the global economy with rippling effects on international commodity and financial markets. because of the openness of the ghanaian economy, such global shocks ultimately pose challenges to macroeconomic stability, which is a necessary condition for growth. such