Bank Of Ghana Targets 8% Inflation In 2016

Dr-Henry-WampahGhana’s inflation rate will stay outside its target band in the short term but will ease towards 8 per cent plus or minus 2 per cent, by the first half of 2016, Governor of the Bank of Ghana (BoG) Governor, Dr. Henry Kofi Wampah, has said.

Speaking at a press briefing in Accra to announce the new policy rate of the bank which has been hiked to 21 per cent, he said the BoG’s Monetary Policy was concerned about the outward shift in the medium term inflation path, relative to the previous forecast.

“The latest forecast indicates that inflation would continue to remain outside the target band, but expected to ease gradually towards the medium term target band of 8.0±2 percent in the first half of 2016,” he said.

The ease in inflation over the policy horizon, the Governor said, was contingent on significant fiscal consolidation, and maintenance of the tight monetary policy stance.

“In the absence of these, the inflation target could take a longer duration in excess of twelve (12) quarters to be achieved, considering the vulnerabilities in the economy,” he said.

On credit conditions in the country, he said the latest credit conditions survey showed easing of credit to large enterprises and households.

On the other hand, he said credit to small and medium enterprises and loans for mortgages continued to be tightened.

“In terms of maturity, long term credit continued to be tightened while short term credit availability improved during the period,” he said.

He said in nominal terms, credit to the private sector grew by 47.5 per cent in September 2014, compared to 26.6 per cent in the same period last year.

“Real credit growth was 26.6 per cent compared to 13.1 percent a year ago. The credit growth was mainly funded by increased mobilisation of domestic deposits by the banking system,” he said.

Dr. Wampah said, non-performing loans (NPL) ratio, adjusted for fully provisioned loans, increased to 5.4 per cent in September 2014 compared with 5.1 per cent in the corresponding period last year.

He however stated that, the unadjusted NPL ratio declined from 12.9 per cent to 12.1 percent in the same period.

“The capital adequacy ratio for the banking industry fell marginally to 17.0 per cent compared to 18.3 per cent in the same period last year, but remained well above the prudential limit of 10 per cent,” he said.

By Kingsley Asare

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