Governor Dr Ernest Addison of the Bank of Ghana (BoG) has clarified the Monetary Policy Committee’s (MPC) decision to keep the policy rate at 29% during the 119th MPC press conference held on July 26.
Dr Addison highlighted that the decision was influenced by several factors related to domestic price developments.
These include recent exchange rate pressures, upward adjustments in utility tariffs, and increases in ex-pump fuel prices.
These developments have contributed to a slightly elevated inflation profile for the year.
“Given these factors, there is some uncertainty regarding the inflation path for the year,” Dr. Addison explained. “While inflation is expected to remain within the target year band, the risks are slightly tilted towards the upside.”
The Governor emphasized that maintaining a solid monetary policy stance is essential to address these uncertainties. This includes the need for robust fiscal consolidation efforts and vigilance to meet the end-year inflation objectives.
“This will require maintaining the strong monetary policy stance supported by strong fiscal consolidation efforts, including remaining vigilant to ensure that the end-year inflation objectives are achieved,” he said.
The decision to keep the policy rate steady is expected to stabilize commercial banks’ lending rates to businesses, providing a consistent financial environment for corporate borrowers. This stability aims to support economic activities and manage inflation risks effectively.
The MPC’s choice to hold the policy rate comes after a comprehensive review of the country’s macroeconomic developments over the past two months. Dr. Addison’s explanation underscores the central bank’s commitment to balancing inflation control with economic stability.
