Utility Tariff Hikes, Transport Fares Push Ghana to Maintain Policy Rate

Governor of Bank of Ghana, Dr. Ernest Addison

Accra, Ghana, September 20, 2019//-The Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) has maintained its policy rate 16% for second consecutive times, citing emerging pressures coming mainly from the recent upward adjustment of utility tariffs, ex-pump prices and transport fares.

The Chairman of the MPC and Governor of BoG, Dr Ernest Addison made the announcement at a press briefing in Accra today, explained that the second round effects of these administrative measures would have to be monitored closely over the next quarter.

The Committee’s view was that the pace of disinflation had slowed somewhat. The recent underlying inflation trends gauged by the core inflation and weighted inflation expectations all showed some uptick in August 2019”, he added.

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.

Following the revision of the Consumer Price Index by the Ghana Statistical Service to reflect weights from the Ghana Living Standards Survey of 2017 and a revised base year of 2018, a new measure of headline inflation was estimated at 7.8 percent for August 2019, moving it below the central path of the Bank of Ghana’s medium-term inflation target of 8±2 percent.

Food inflation was reported at 8.2 percent and non-food inflation was at 7.4 percent.

However, underlying inflation, measured by core inflation (CPI excluding utility and energy) inched up slightly, alongside some moderate pick-up in inflation expectations from businesses, consumers, and from the financial sector.

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