Business

BoG keeps policy rate at 16 per cent

The Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) has for the third consecutive time this year maintained the Monetary Policy Rate at 16 per cent on the back of positive external sector developments, improved growth and subdued inflation.

Dr Ernest Addison, Governor of the BoG who announced the policy rate at a news conference in Accra on Friday after the 89th regular meeting of the MPC, said inflationary pressures in advanced economies remained relatively subdued as a result of low energy prices and sluggish wage growth.

“In the outlook, inflation is forecast to remain stable in advanced economies due to the expected moderation in global growth, relatively anchored inflation expectations and moderate wage growth,” he said.

The Governor, who is the chairman of the MPC,  indicated that the prospects of anticipated cuts in the US Federal rate in the second half of the year, and the general monetary policy stance across most advanced economies was envisaged to help stabilise global interest rates or further reduce it.

This, Dr Addison said, would help support a reverse-flow of capital to emerging markets and frontier economies with strong fundamentals and also limit the risk of sudden portfolio reversals from emerging markets and development economies.

The Governor said the country for the first half of the year recorded a trade surplus of $1.9 billion representing 2.8 per cent of Gross Domestic Product, compared to a surplus of $1.3 billion, which is 1.90 per cent of GDP in the first half of 2018 and a current account surplus of $39 million (0.1 per cent of GDP).

“The current account surplus, though marginal, is the first in recent history. This surplus, together with significant inflows to the capital and financial account, yielded an overall balance of payment surplus of $1.3 billion (1.9 per cent of GDP) covering the review period, compared with a deficit of $372 million (0.6 if GDP last year,” Dr Addison said.

He said the country recorded a trade balance of $1.9 billion (2.8 per cent of GDP) for the first half of the year, compared to the surplus of $1.3 billion (1.9 pe rcent of GDP) in the first half of 2018, saying the trade account surplus was influenced by crude oil export which stood at nearly $8 billion for the first half of the year.

Gross International Reserves, Dr Addison said stood at $8.6 billion (equivalent to 4.3 months of import cover) at the end of June, 2019 up from $7.0 billion (equivalent to 3.6 months of import cover) the end of December, 2018.

The Governor said the country’s economic growth continued to pick up, evidenced by the latest growth estimates released by the Ghana Statistical Service.

By Kingsley Asare

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