The Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) yesterday maintained the policy rate, citing the positive growth outlook of the economy and slowing disinflation process.
The MPC maintained the policy rate at 16 per cent, putting a break on the monetary policy easing the MPC started in 2017, when the policy rate was above twenty per cent.
Dr Ernest Addison, the Governor of the BoG and Chairman of the MPC who said this at a press conference after the 87th regular meeting of the MPC said the growth prospects of the economy looked bright in spite of the recent challenges the cedi faced and the current negative output gap closing but at a moderated pace.
“The medium-term outlook for growth is strong with the preparation of new oil wells including those of AKER Energy which has submitted a $4.4 billion plan for developing an offshore field, the re-opening of operations at the Obuasi mine, and the implementation of growth-oriented government initiatives. These are all expected to boost medium-term growth prospects,” he said.
Overall Gross Domestic Growth (GDP) rate for 2018 was projected at 5.6 per cent, while non-oil GDP was projected to expand at 5.8 per cent, the Governor said, adding that “with an average growth of 6.1 per cent for the first three quarters of 2018, the broad expectation was that the annual target of 5.6 per cent would be realised”.
Dr Addison said the pace of economic activity, captured by the BoG’s updated Composite Index of Economic Activity remained strong, recording an annual growth of 3.2 per cent in January 2019, up from 2.4 per cent in December 2018.
He said the increase in the CIEA was mainly driven by growth in Domestic Value Added Tax, Industrial Consumption of Electricity, Port Activity and Imports.
“Latest results from surveys conducted by the BoG in February 2019 show an improvement in consumer confidence even though recent depreciation the currency affected business sentiments,” he said.
The Chairman of the MPC said recent data released by the Ghana Statistical Service since the MPC meeting in January indicated that inflation was still within the medium-term target band of 8 plus minus two per cent.
Inflation declined in January to 9.0 per cent, from 9.4 per cent in December 2018, but inched up to 9.2 per cent in February 2019, driven by increases in non-food inflation.
On the depreciation of the cedi, Dr Addison said the cedi, which fell by 8 per cent as March 19, against the other international currencies, had begun to appreciate against its international peers.
By Kingsley Asare