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Bank of Ghana keeps policy rate at 14.5%

This is the fourth time this year that the Bank of Ghana (BoG) has kept the policy rate unchanged at 14.5%

The monetary policy committee (MPC) of the Bank of Ghana (BoG) has kept the policy rate unchanged at 14.5%

Speaking at a press conference in Accra on Monday (23 November), Ernest Addison, Governor of the Bank of Ghana said underlying inflation and inflation expectation are easing.

He said the performance of the banking sector remains strong. “The sector recorded strong growth in deposits and investments and solvency indicators were significantly higher than regulatory thresholds. Pandemic tail risks, that is, pandemic-related impact on non-performing loans, would require continuous supervisory vigilance.”

“The fiscal and monetary policy measures, which have increased liquidity in the economy, appear not to be impacting inflation, partly due to the existence of the output gap,” he said, adding that the Committee expected inflation to return to its central path by the second quarter of 2021.

Dr Addison said macroeconomic conditions had generally improved relative to conditions at the time of the last MPC meeting in September 2020.

He said, “global conditions continue to be supportive, domestic inflation is easing, growth prospects are improving, crude oil prices have stabilized, monetary aggregates have expanded but with minimal impact on inflation, the current account deficit is stable, remittances inflow has remained firm, the exchange rate has been stable and reserve buffers continue to remain strong.”

Dr Addison said after contracting in March, April and May, the real Composite Index of Economic Activity (CIEA) recorded an annual growth of 10.5% in September 2020, compared with 4.2% growth a year ago.

The key drivers of economic activity during the period were construction activities, manufacturing, and credit to the private sector.

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