Bank of Ghana retains policy rate at 26 percent, slower inflation …

ACCRA, Ghana, Capital Markets in Africa — The Bank of Ghana kept its policy rate unchanged at 26 percent on Monday, citing a slower pace of consumer price inflation, the central bank governor Dr Kofi Wampah stated in a press conference at the end of the Monetary policy Committee Policy meeting.

Dr Kofi Wampah, announced that inflation rose to 17.7 percent in December 2015, up marginally from 17.6 per cent in November.

“This indicates some moderation in price movements over the previous month. The slower pace of inflation reflects the tight monetary policy stance and the ongoing fiscal consolidation,” Dr Wampah told a press conference.

“In addition, our latest survey shows that inflation expectations have broadly moderated.”

Dr Wampah said core inflation, which reflected underlying inflation, had continued to rise, but at a slower pace.

Going forward, the central bank’s Monetary Policy Committee expected the slower pace of price changes to continue and steer inflation down towards the medium target band of eight per cent, plus or minus two percentage points.

Although, there are upside risks to the inflation outlook which include uncertainties regarding the second round effects of the unanticipated petroleum price adjustments, exchange rate developments, as well as worsening external financing conditions. However, these risk would be moderated by lower crude oil prices, and improvements in the energy situation,” the central bank governor hinted..

In respect of growth outlook, Dr Wampah said in the medium term, Ghana’s growth conditions were expected to recover, supported by a sustained improvement in the energy situation, anticipated increased production of oil and gas and a general improvement in the macroeconomic environment. But, continuing tightness in the monetary and fiscal policy stance, weak consumer confidence, falling commodity prices and a slack in global growth posed risks to the growth outlook.

Dr Wampah said the maintenance of the tight policy stance, the smoothening of the supply of foreign exchange, and the enforcement of the repatriation of export proceeds into the banking system, in line with the Foreign Exchange Act, were expected to moderate the seasonal volatilities usually experienced in the first half of the year.

The country is under a three-year aid program with the International Monetary Fund (IMF) to support an economy dogged by high fiscal deficits and public debt, with consumer inflation consistently above government target. Also, the country is preparing to hold presidential and parliamentary elections in November. 

Leave a Comment