The Bank of Ghana has maintained its benchmark policy rate at 25.5 percent, Abdul-Nashiru Issahaku, governor of the bank, announced Monday.
He explained during a press briefing after a Monetary Policy Committee (MPC) meeting that the decision was geared towards maintaining a tight policy stance as the prospects for growth and inflation were fairly balanced.
“The Committee viewed the risks to inflation and growth as balanced and decided to maintain the Monetary Policy Rate at 25.5 percent. The Committee viewed the declining trends observed in headline inflation, core inflation and inflation expectations as positive,” Issahaku explained.
Nonetheless, he added that there were concerns regarding the inflation outlook “which could be impacted by the pass-through effects of the recent exchange rate volatility, persistent increases in food inflation and the fiscal outturn.”
These developments in headline inflation during the year, the governor said, were broadly in line with the central bank’s 2016 forecasts.
Ghana closed the year 2016 with a headline inflation of 15.4 percent. The governor therefore underscored the need to return to the path of fiscal consolidation to complement the tight monetary policy stance.
“Although growth conditions remain modest, prospects are positive underpinned by improved oil and gas production from the new oil fields, the gradual rebound in growth in private sector credit, and improved sentiments and expectations,” the governor said, adding the risks to growth include policy uncertainties, especially in the global environment. Enditem