Ghana Maintains Key Policy Rate at 16 Percent  

Governor of Bank of Ghana, Dr. Ernest Addison

Accra, Ghana, July 19, 2019//-The Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) has maintained its policy rate 16%, citing waning pass-through from exchange rate depreciation and well-anchored inflation expectations in the country.

The Chairman of the MPC and Governor of BoG, Dr Ernest Addison made the announcement at a press briefing in Accra today.

The policy rate is the rate at which the central bank lends to the commercial banks in the country. Keeping the rate at 16% implies that all the commercial banks are expected to keep their interest rates in the country.

Dr Addison noted that while these risks remain, the Bank’s core mandate of price stability appears to be on track. Inflation has remained within the target band in the last 15 months, according to him.

He added: “Headline inflation has trended downwards since April 2019 after three consecutive price increases on the back of exchange rate pass-through effects. From 9.5 percent in April, inflation declined to 9.4 percent in May, and further to 9.1 percent in June”.

Underlying inflation also trended downwards as the Bank’s main measure of core inflation (inflation excluding fuel and utilities prices) eased in June 2019, Dr Addison stated.

Reviewing the health of the Ghanaian for the first five of 2019, the BoG Governor observed: “The domestic currency market has remained relatively calm”.

The Ghana Cedi cumulatively depreciated by 8.2 percent in the year to July 18, 2019, compared with 5.8 percent for the corresponding period of 2018.

Against the British pound and Euro, the Ghana cedi cumulatively depreciated by 5.9 percent and 6.5 percent respectively, compared with 2.5 percent and 2.9 percent depreciation respectively over the same corresponding period.

In trade-weighted terms, the real effective exchange rate continued to be broadly aligned with the underlying fundamentals, he explained.

According to Dr Addison, economic activity remains strong and broad- based. Although there are some downside risks to growth, mainly from subdued business sentiments and increase in utility tariffs, growth is expected to remain robust in the second half of the year.

The medium-term outlook for the real sector is positive based on improving consumer sentiments and continued recovery in private sector credit growth, he told journalists in Accra.

African Eye Report

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