Ghana keeps policy rate at 14.5 percent despite rising inflation pressures

Dr. Ernest Addison
Dr. Ernest Addison

Ghana’s central bank announced on Monday here to maintain its benchmark policy rate at the one-year-old level of 14.5 percent despite some rising inflationary pressures.

This is the sixth straight time the central bank maintained the rate after reducing it to this level in March 2020.

Ernest Addison, the Governor of the Bank of Ghana, told the media after the 99th Monetary Policy Committee meeting that despite emerging inflation pressures, there was no risk to the inflation target for the year.

“The Bank’s forecast remains broadly unchanged with headline inflation expected to return to the target band in the second quarter of 2021. Risks to inflation in the near-term are broadly balanced,” Addison said.

He, however, conceded that “there are emerging short-term pressures emanating from the rising crude oil prices and the direct and secondary price effects of the revenue measures announced in the 2021 budget.”

The governor said the central bank would remain vigilant in monitoring these risks and take the necessary actions when necessary to reduce the risks.

He said the country’s economy “is on a rebound with a sustained momentum in the pick-up in economic activity.”

“The Bank’s updated Composite Index of Economic Activity recorded an annual growth of 13.9 percent in January 2021, the highest since December 2019, compared to 3.4 percent in the corresponding period of 2020,” he added.

He said the rollout of the COVID-19 vaccines had also contributed to increasing business confidence in the West African country.

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