Accra, Ghana, July 23, 2018//-The Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) has maintained its policy rate 17% for second time, citing disinflation pressures, geopolitical tensions and uncertainties in the external environment.
The Chairman of the MPC and Governor of BoG, Dr Ernest Addison made the announcement at a press briefing in Accra today.
He explained: “Headline and core inflation have trended up in recent months although inflation expectations remain broadly well-anchored. The medium-term forecast has remained broadly unchanged and suggests a gradual return to the central path over the horizon”.
In assessing the balance of risks, the committee was of the view that although inflation had moved upwards in the recent readings, this came mainly from the effects of increases in administered prices of petroleum and transportation costs, Dr Addison said.
“The Committee viewed that second round effects from these relative price changes would not be significant enough to alter the inflation trajectory over the medium-term”.
This would require continued fiscal consolidation together with tight monetary policy to keep inflation within the target band, he noted.
“Given the circumstances, especially with regards to the global outlook, the Committee decided to maintain the Monetary Policy Rate at 17.0 percent while closely monitoring developments in the near-term”, Dr Addison told journalists.
The policy rate is the rate at which the central bank lends to the commercial banks in the country.
Keeping the rate at 17% implies that all the commercial banks are expected to keep their interest rates in the country.
Reviewing the economy for the first six months, Dr Addison maintained: “The Ghanaian economy continues to record strong growth with a 6.8 percent GDP growth in the first quarter of 2018, compared with 6.7 percent in the same period of 2017.
Non-oil growth for the first quarter also picked up strongly to 5.4 percent, from 4.0 percent in the comparative period of 2017″.
” The growth pickup is evidenced in a stronger rebound by the services sector, which rose by 5.2 percent, compared with 3.4 percent in the same period of 2017″.
The Bank’s Composite Index of Economic Activity (CIEA) also showed a strong pickup reflecting increased industrial consumption of electricity, cement sales and exports. The real CIEA recorded an annual growth of 3.2 percent in May 2018, compared to 2.6 percent in the corresponding period of 2017.
African Eye Report
