Deteriorating business conditions may soften BoG’s hawkish stance – Report

Ghana’s Purchasing Managers Index (PMI) for August 2022 showed a contraction in business activity in the private sector as it declined to 45.9 per cent, as against 48.8 per cent in July 2022.

According to the Weekly Fixed Income Update by Databank Research, the deteriorated business conditions come on the back of subdued consumer demand, which was negatively affected by the heightened price pressures.

Overall, it said, input price inflation accelerated to an eight-year high owing to unfavourable foreign exchange rate movements and increasing fuel prices, propelling output prices to record levels.

“We expect the BoG to soften its hawkish stance on policy rates with the hardening business conditions,” the report said.

This week the Treasury will seek to raise ¢1.717 billion across the 91-day to 364-day tenors. The uptake will be used to refinance total maturities worth ¢1.598 billion.

The Treasury allotted ¢2.226 billion out of the total bids of ¢2.288 billion, translating into a bid-to-cover ratio of 1.03x.

The government thus continued to build buffers by taking up excess requests, exceeding its target by 32.37 per cent and its T-bill refinancing obligation by 42.03 per cent.

The 91-day and 182-day tenors cleared at 29.48 per cent and 31.05 per cent, respectively.

The T-bill curve remains humped with upward corrections expected for the 364-day in the upcoming auction.

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