In its bid to sustain growth in the economy and hold inflation in check, the Monetary Policy Committee (MPC) of Ghana’s central bank took a decision here on Monday to stay its benchmark policy rate at 16 percent.
According to governor of Bank of Ghana (BoG) Ernest Addison the major reason for the decision was to ensure that inflation is controlled.
“The Committee noted that the recent exchange rate pass-through has slowed the disinflation process, leading to a slightly elevated inflation profile as shown in the latest forecasts,” Addison explained.
Inflation rate inched up gradually from 9.2 percent in February to 9.5 percent in April, and the governor said the decision of the bank was to ensure that the rate of inflation does not increase further.
This is the second time the bank maintained the policy rate at current levels after reducing it to 16 percent in January.
The governor noted, however that core inflation remained under control with inflation expectations on a fairly safe path.
The benchmark policy rate is one of the key factors used in fixing the base rate of commercial banks, and a lower or stable policy rate ensures a fairly stable or lower interest rates.
The local Cedi cumulatively depreciated by 5.8 percent between January and May, compared with 0.2 percent for the corresponding period of 2018.
In his comment, a monetary policy expert, Nana Otuo Acheampong told Xinhua that the current stable level of the policy rate has positive prospects for the economy since it gives room for banks to lend at lower rates to businesses.
“So far, some banks have started reducing the lending rates, and it is good for the economy, and job creation,“ Acheampong noted. Enditem