Dr. Ernest Addison
Dr. Ernest Addison

The Ghanaian central bank announced on Monday the decision to hold its policy rate at 14.5 percent as headline inflation fell to 10.1 percent in October.

It is the fourth straight time the central bank maintained the rate after reducing it to this level in March.

Ernest Addison, Governor of the Bank of Ghana, told the media after the 97th Monetary Policy Committee meeting that macroeconomic conditions had generally improved compared with conditions in September.

“Inflation is almost at the upper band target. The fiscal and monetary policy measures, which have increased liquidity in the economy, appear not to be impacting the rate of price increases, partly due to the existence of the output gap,” Addison said.

He added that growth prospects were also improving with a stabilized crude oil price, stable current account balance, a robust inflow of remittances, and a predictable exchange rate, as “reserve buffers continue to remain strong.”

“The key risks, however, are the evolution of the budget deficit and the financing needs to support budget implementation and the uncertainty surrounding the COVID-19 pandemic,” Addison added.

Ghana, a developing country dependent on the export of crude oil, gold, and cocoa, uses the inflation-targeting model of monetary policy to adjust liquidity and hold down inflationary pressures.

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