Ghana central bank increases monetary policy rate to 22 percent

Dr. Henry Kofi Wampah, Governor BoG
Dr. Henry Kofi Wampah, Governor BoG

The Central Bank of Ghana Wednesday inched up its monetary policy rate from 21 percent to 22 percent.
Central bank governor Henry Kofi Wampah announced the decision here after three days of Monetary Policy Committee (MPC) meeting.

Dr. Henry Kofi Wampah, Governor BoG
Dr. Henry Kofi Wampah, Governor BoG

He explained that inflation and inflation expectations were elevated with the likelihood of a further lengthening of the inflation target horizon from the second half of 2016 to 2017.
“This development is largely driven by exchange rate pass- through, possible upward adjustment in energy and utility prices as well as cost push factors associated with the persisting energy sector challenges,” the governor explained.
The Committee observed that fiscal performance in the first quarter had been encouraging, with the deficit as well as central bank financing well within targets.
“Although the emerging consolidation constitutes a downside risk to growth, the subdued demand pressures will help to dampen inflation pressures. Sustaining the first quarter performance over the medium term is critical, and together with the tight monetary policy stance will facilitate the achievement of macroeconomic stability,” Wampah added.
He noted that external sector vulnerabilities also posed considerable risk to both inflation and growth, adding that the fragile global financial conditions and continued commodity price volatility could adversely impact on reserve accumulation, while the anticipated increase in US interest rates could lead to capital flow reversals.
The Ghana Statistical Service had announced a 0.2 percentage point increase in inflation to 16.8 percent in April, relative to the 16.6 percent for March, and many analysts had predicted that Bank of Ghana would maintain the rate at 21 percent.
In its support program for Ghana’s latest fund program, the IMF tasked the central bank to reduce its financing for government deficit to 5.0 percent this year and zero percent in 2016. Enditem

Source: Xinhua

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