Accra, Ghana, November 25, 2019//-The Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) has maintained its policy rate 16% for six consecutive times.
The Chairman of the MPC and Governor of BoG, Dr Ernest Addison made the announcement at a press briefing in Accra today, explained the committee viewed risks to the inflation and growth outlook as broadly balanced, and therefore decided to keep the Monetary Policy Rate at 16 percent.
While standing ready to take decisive policy actions when necessary to ensure that inflation remains within the target band, he added.
“Overall, the economy presents fairly resilient and robust performance with regards to output growth and a strong trade and payments position. The economy is positioned firmly on the path of stability with inflation forecasted to stay within the medium-term target band of 8±2 percent, barring any unanticipated shocks”.
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 the coordinated monetary policy responses of the major central banks to keep interest rates on hold and adopt a dovish monetary policy stance should benefit emerging market economies with solid macroeconomic fundamentals.
The latest data from the Ghana Statistical Service and the Bank’s Composite Index of Economic Activity both show that economic growth continues to remain robust and broad-based, although at a moderated pace relative to 2018.
Over the medium-term, growth will be supported by the services sector, especially as the banking sector continues to grow stronger and resilient, as well as the continued implementation of growth-oriented programmes in the industry and agricultural sectors of the economy.
“The external sector performance continued to remain strong, with an improved trade surplus for the third consecutive year. This contributed to further narrowing of the current account deficit and supported additional reserve build-up of US$1.3 billion.
This should provide strong buffers to withstand shocks and ensure stability in the foreign exchange market”, Dr Addison said.
Fiscal policy has been a source of considerable stimulus. The 2019 budget execution was broadly in line with expectations with the budget deficit outturn almost on target and within the fiscal rule of 5.0 percent of GDP.
While acknowledging that there are electoral cycle fiscal risks, strong commitment by the fiscal authorities to stay on the consolidation path should help sustain the stability and growth achieved over the past three years, according to Dr Addison.
The committee noted that the synchronised slowdown in the global economy during 2019 is beginning to give way to a recovery, mainly in the emerging market and developing economies and at a modest and uneven pace.
African Eye Report
