The Monetary Policy Committee of the Bank of Ghana (BoG) has maintained the policy rate at 13.5%.
Addressing a press conference after the 102nd MPC meeting Monday (27 September), the Governor of the Bank of Ghana, Dr Ernest Addison said due to “…fairly balanced risks to inflation and growth in the outlook, the Committee decided to keep the policy rate at 13.5%.”
Dr Addison said, “Inflation has risen sharply over the last two readings, driven mainly by sustained food price increases. Although food inflation has pushed overall inflation close to the upper limit of the band, core inflation remains relatively subdued. In the view of the Committee, the increase in inflation is mainly due to food inflation which is expected to abate with the onset of the harvest season.
He added, “This notwithstanding, the latest forecast indicates that inflation will remain within the medium-term target band, but closer to the upper limit in the near-term, in the absence of further unexpected shocks.
“A close monitoring of the inflation situation is however warranted to respond swiftly to prevent potential second 10 round effects on headline inflation from the rising food inflation. The Committee stands ready to respond appropriately as needed if this particular risk materializes.”
The cedi
According to the Bank of Ghana (BoG), the Ghana Cedi has performed strongly with a year-to-date depreciation of 1.7%.
The country’s higher sovereign spread has not shifted foreign investor behaviour as net monthly purchases of securities on both the debt and equity markets remain relatively favourable.
In the outlook, rising interest rates in advanced economies on account of tapering may pose some risks.
However, the strong reserve build-up and foreign exchange inflows from the recent SDR allocation and the expected syndicated cocoa loan proceeds should help to cushion currency pressures in the near-term.
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