Addressing the media after the 67th regular meetings of the MPC, Governor of the Bank of Ghana, Henry Kofi Wampah said this was necessary to avoid a prolonged era of high interest rates and high inflation.
According to the Ghana Statistical Service (GSS), inflation stabilized at 17.4 percent in October, same as in September and up from 17.3 percent in August, indicating a moderation in price movements over the past three months.
There have been concerns that the further increase in MPR would not only make the cost of credit for businesses go up, but also subdue economic growth prospects, stressing that the bank would start reducing the policy rate as soon as the inflationary pressures ease, and the currency depreciation is dealt with.
Commenting in a mailed message to Xinhua, Razia Khan, Managing Director, and Chief Economist for Africa and Global Research at the Standard Chartered Bank expressed satisfaction about the increased MPR, adding, it is “in line with our expectation, citing inflation expectations and CPI above the medium-term target.”
She said inflation was expected to decelerate next year, as the base effect and impact of tighter policy are both reinforced, with doubts over whether inflation can be reduced to 10 percent by the end of 2016 still persist, citing pressures from currency depreciation and the imminent utility tariff adjustment. Enditem