Accra, Ghana, April 1, 2019/-The Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) today maintained its policy rate at 16 percent.
Announcing the decision of the committee, the Governor of BoG and Chairman of the MPC, Dr Ernest Addison explained to journalists in Accra that the pace of disinflation has slowed.
He noted that; “growth remains relatively strong and the negative output gap seems to be closing, although at a relatively modest pace. Overall GDP growth for 2018 is projected at 5.6 percent, while non-oil GDP is projected to expand at 5.8 percent.
With an average growth of 6.1 percent for the first three quarters of 2018, the broad expectation is that the annual target of 5.6 percent will be realized. For 2019, GDP growth is projected at 7.6 percent”.
The policy rate is the rate at which the central bank does overnight lending to commercial banks in the country. With the keeping of the policy rate, all the commercial banks are expected to maintain their base rates.
The pace of economic activity, captured by the Bank’s updated Composite Index of Economic Activity (CIEA) remained strong, recording an annual growth of 3.2 percent in January 2019, up from 2.4 percent in December 2018. In the same period of 2018, the CIEA registered a 3.6 percent growth, Dr Addison explained.
“The increase in January was mainly driven by growth in Domestic VAT, Industrial Consumption of
Electricity, Port Activity and Imports. Latest results from surveys conducted by the Bank of Ghana in February 2019 show an improvement in consumer confidence even though recent depreciation in the currency affected business sentiments”.
Two inflation readings released by the Ghana Statistical Service since the January MPC meeting showed inflation still within the medium term target band. Inflation decelerated in January to 9.0 percent, from 9.4 percent in December 2018, but inched up to 9.2 percent in February 2019 driven by increases in non-food inflation, according to Dr Addison.
Since the last quarter of 2018, inflation has oscillated within a band of 9.0 – 9.5 percent, underpinned by a relatively tight monetary policy stance. Underlying inflationary pressures, as measured by the Bank’s core inflation have continued to ease and inflation expectations remain well-anchored.
African Eye Report
