The Bank of Ghana (BoG) has predicted a positive economic and growth outlook for the country in the short to medium term and as a result maintained the Monetary Policy Rate (MPR) at 26 per cent.
Dr. Henry K.A Wampah, Governor Bank of Ghana, addressing a news conference on the economic developments of the country in Accra yesterday after the 69th Meeting of the Monetary Policy Committee (MPC) of the BoG, said the decision to maintain the MPR was due to a slowdown in inflation and stability in the foreign exchange.
“In assessing the current economic conditions, the Committee views the risks to inflation and growth outlook as balanced. Hence, there is the need to maintain the current monetary policy rate stance which together with fiscal consolidation would help bring inflation further down,” he said.
Dr. Wampah who is the Chairman of the MPC said headline inflation in February declined to 18.5 per cent, influenced by lower non-food inflation, adding that monthly inflation rates also showed some slowed down in February which was influenced largely by stability in the exchange rate.
“Core inflation (Consumer Price Index inflation excluding energy and utility prices) has trended downwards since December 2015, pointing to some easing of underlying inflation pressures. The drop in both headline and core inflation is encouraging,” he said.
Dr. Wampah however, said the current levels of inflation remained significantly above the medium term target of below 8.2 per cent, saying “our forecasts indicate that, barring any further shocks, inflation will peak in the first quarter of 2016, and gradually decline thereafter towards the target band by middle of 2017.
On the performance of the local currency against its international peers, the Governor said since August 2015, the local currency had been relatively stable, reflecting the tight policy stance, improved liquidity on the foreign exchange market and the renewed investor confidence in domestic debt instruments.
“As at March 17th, the Ghana cedi has depreciated by 1.4 per cent compared with a depreciation of 11.2 per cent in the same period last year,” Dr. Wampah said.
By Kingsley Asare