The Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) has maintained the policy rate at 30 per cent, citing strong growth and drop in inflation.
The policy rate is the rate which the BoG lends to commercial Banks in the country.
The Chairman of the MPC, Dr Ernest Addison, who disclosed this at a press conference in Accra yesterday after the 114th regular meeting of the MPC, said the Committee took the monetary stance because of the positive macroeconomic conditions.
“On the domestic front, the Committee observed the overall improving macroeconomic conditions with relatively strong economic growth and drop in inflation in August. Economic activity is rebounding strongly, the exchange rate is stabilising, inflation is declining, and level of foreign exchange reserves has improved. Sustained improvement in these indicators should result in the restoration of real incomes and purchasing power,” he stated.
The Governor said the economic growth was relatively strong in the first half of the year and the strong growth outturn observed in the first half of 2023 was expected to continue in the third quarter.
Dr Addison said the latest data released by the Ghana Statistical Service show real Gross Domestic Product growth at 3.2 per cent in the second quarter of 2023, marginally down from 3.3 per cent in the first quarter, and compared with 3.5 per cent in the same period of 2022.
The Governor said inflation was declining and the disinflation process has resumed, which should result in a gradual return towards the target band over the medium-term.
“Headline inflation has declined by a cumulative 14.0 per cent since the peak of 54.1 per cent recorded in December 2022. Non-food inflation has also declined sharply by close to 20 per cent, broadly reflecting the effectiveness of monetary policy. All core inflation measures, monitored by the central bank, are trending downwards, indicating continued easing of underlying inflationary pressures. In addition, one-year ahead survey-based inflation expectations seem well anchored.”
However, Dr Addison said rising international crude oil prices and adjustments to utility tariffs remained a risk to the inflation outlook which would have to be managed through monetary policy vigilance, stressing that “While the expectation is for continued disinflation, it stands ready to respond appropriately should inflation deviate from these broad expectations”.
The Governor said the country’s external sector position had continued to improve significantly in the first eight months of the year, supported by a current account surplus, reflecting higher gold export receipts, import compression, and lower outflows from the services and income accounts.
BY KINGSLEY ASARE