Ghana Maintains Key Policy Rate at 14.5% Despite Inflation Pressures  

Governor of Bank of Ghana, Dr. Ernest Addison

Accra, Ghana, May 15, 2020//-The Monetary Policy Committee (MPC) of Bank of Ghana (BoG) today maintained its policy rate at 14.5 % despite inflation pressures.

This the first time of holding the rate after it was lowered from 16% on the account of coronavirus (COVID-19) pandemic on March 18, 2020.

Analysts had predicted that the MPC could reduce the policy rate because of the rise in inflation for the month of April 2020.

The country’s year-on-year inflation rate for April 2020 jumped to 10.6% from 7.8% in March 2020.

This depicted an increase of 2.8 percentage points higher than last month, the Ghana Statistical Service said.

The Food basket of the Consumer Price Index (CPI) contributed significantly to the increase in the inflation for April.

However the Chairman of the MPC and Governor of BoG, Dr Ernest Addison told journalists via online pricess conference: “The Bank’s latest forecast points to elevated risks to the inflation outlook in the forecast horizon, underscored by the recent jump in headline inflation”.

Dr Addison added: “On the downside, relief measures on water and electricity tariffs and declining crude oil prices are likely to ease price pressures in the outlook.

The recent rise in inflation is projected to peak in the second quarter and begin to return to the disinflation path in subsequent quarters with inflation settling within the medium-term target band by the end of the year”.

On the growth outlook, baseline projections show a sharp downturn in GDP growth with the economy operating below capacity in the medium-term. Under the circumstances and given the balance of risks to inflation and growth, the Committee decided to keep the policy rate unchanged at 14.5 percent”.

The policy rate is the rate at which the central bank lends to the commercial banks in the country. With the holding of the rate, it implies that all the commercial banks are expected to keep their interest rates in the country.

 African Eye Report

 

 

 

 

 

 

 

 

 

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