The increase he explained was to prevent the potential upward risks to the inflation forecast stemming from the planned significant increase in utility tariffs.
“The monetary policy committee is determined to prevent first round effects of the likely increases in prices and higher cedi liquidity during the fourth quarter from being entrenched into elevated inflation expectations,” he said.
Dr. Wampah said the cedi appreciated in July by 25.5 per cent and depreciated in August by 148 per cent adding that “the uncertainty in the foreign exchange market heightens inflation expected.”
He however, explained that the currency volatility is expected to moderate due to the tight monetary policy stance, as well as the anticipated inflows from the Eurobond issue and the syndicated pre-export finance facility for cocoa.
The governor stated that near-term domestic growth conditions continue to be adversely impacted by challenges in the energy sector.
He said latest surveys showed that business sentiments have softened while growth is projected to rebound in the medium term as the economy rebalances, supported by increased production of oil and gas.
Dr. Wampah noted that fiscal consolidation continued in the first seven months while expenditures remained within target adding that the development resulted in a fiscal deficit of three per cent of Gross Domestic Product (GDP) within the programmed target of four per cent”.
“Maintaining the peace of fiscal consolidation over the medium term is necessary to complement the monetary policy stance for the attainment of the medium term inflation target,” he said.
He said merchandise experts receipts for the first seven months of 2015 amounted to 6.3billion down from 8.1billion dollars in the same period last year.
Dr. Wampah stated that gross foreign assists as July 1, 2015 stood at 4.4 billion dollars enough to cover 2.9months of import goods and services compared with 5.5billion dollars in December 2014.
He assured that the BoG would continue to monitor developments and take appropriate action if necessary.