At its 69th Monetary Policy Committee (MPC) meeting, the Bank of Ghana decided to keep its benchmark policy rate at 26 percent, the Governor of the Central Bank, Henry Kofi Wampah, disclosed here on Monday.
According to him, the Committee had decided to maintain the monetary policy rate after assessing the current economic conditions.
“Hence, there is the need to maintain the current monetary policy stance which together with fiscal consolidation would help bring inflation further down.
“The Committee therefore decided to maintain the policy rate and reiterated its price stability mandate,” Wampah told the media.
He said the Committee would continue to monitor developments in the economy and take further actions, if necessary, to ensure the attainment of its target within the forecast horizon.
While the local Ghana cedi currency has remained fairly stable depreciating by 1.4 percent as of March 17, 2016, compared with a depreciation of 11.2 percent in the same period last year, inflation also fell from 19 percent in January 2016 to 18.5 percent in February 2016.
Wampah asserted that fiscal consolidation was on track with a tight fiscal regime being implemented by the government, which, coupled with a tight monetary policy stance, was yielding some positive results.
The Monetary Policy Rate is the benchmark rate which informs the rate at which banks lend to their clients.
Ghana’s fiscal deficit, which was 10 percent in 2014, fell to 7.1 percent last year, while provisionally, current account deficit in 2015 improved to 7.8 percent of GDP, relative to 9.5 percent in 2014.
“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 mid-2017, same as our January forecast. The upside risks to the inflation outlook include uncertainties regarding the second round effects of the upward adjustment of the transportation costs and the tight external financing conditions,” the governor, who also chairs the MPC, stated.
In spite of the modest pickup in the Composite Index of Economic Activities (CIEA), Wampah said general growth conditions remained subdued, reflecting the tight policy stance, declining private sector credit growth and lingering concerns about the energy crisis.
“It is anticipated that the turnaround in the energy situation, additional oil and gas production and improvement in the macroeconomic environment would further boost growth later in the year,” the governor stated. Enditem