The Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) has maintained the monetary policy rate at 30 per cent in a bid to bring inflation further down to the bank’s single digit medium-term target.
“We noted that although inflation is decelerating, it remains high relative to target. Therefore, there is a need to keep the policy rate tighter-for-longer until inflation is firmly anchored on a downward trajectory towards the medium-term target. Given these considerations, the Committee decided to maintain the monetary policy rate at 30.0 percent,” the Governor of BoG, Dr Ernest Addison,said when he addressed the final MPC press conference for the year after its regular meeting to review developments in the economy
The BoG’s medium-term inflation target is below 10 per cent, and the country’s inflation rate is currently 35.2 per cent and the monetary policy rate is the rate the BoG lends to commercial banks.
He said the Committee also considered the relative stability in the Ghanaian economy and the policy rate remained unchanged.
Dr Addison, who is the chairman of the MPC, said headline inflation had continued to decelerate in the past few months,consistent with forecasts.
“The latest bank forecast indicates that the disinflation process is expected to continue, supported by the current tight monetary policy stance, relatively stable exchange rate, and base drift effects. All the core measures of inflation and inflation expectations are pointing downwards, and the bank will remain vigilant on risks to the disinflation process,” he stated.
Dr Addison said the domestic economic activity continued to recover evidence by the steady improvement in the bank’s high frequency economic indicators.
He said the composite index of economic activity was recovering from negative territory and was likely to turn positive by end of year, showing a more solid rebound in economic activities.
Dr Addison mentioned the Committee observed broad improvements in the economy, reflecting stable exchange rates, the sustained disinflation process, and increased accumulation of foreign exchange reserves.
“These developments reflect improvements in underlying policies, including fiscal consolidation, zero financing of the budget by the central bank, and relatively favourable external conditions. In the outlook, the improvements will be sustained by the continued maintenance of tight monetary conditions, sustained fiscal consolidation, and continued reserve accumulation supported through the Gold for Reserves programme,” the Governor stated.
He said the country’s external position was strong and the Gross International Reserves, excluding pledged assets and petroleum funds, reflected a build-up in reserves.
BY KINGSLEY ASARE
