• Inflation expectations are well-anchored, Addison says
  • Decision to hold is in line with forecasts in Bloomberg survey

Ghana’s central bank held its benchmark interest rate even as inflation reached a six-month high in April

The Bank of Ghana kept the key rate at 16%, Governor Ernest Addison told reporters Monday in the capital, Accra. That was in line with the forecast of all four economists in a Bloomberg survey.

Key Insights:

  • The unchanged stance comes after the central bank’s surprise rate cut in January. The cedi weakened after that move, but it has since recovered most of those losses, reducing pressure on the Bank of Ghana to prop up the currency with tighter monetary policy. Core inflation remains subdued and price-growth expectations are well-anchored, Addison said.
  • While inflation quickened to 9.5% in April, it has been inside the target band of 6% to 10% for more than a year and Bank of Ghana First Deputy Governor Maxwell Opoku-Afari said earlier this month price growth is likely to slow to about 8% by the end of the year. The central bank aims to keep its key rate above the inflation rate, he said.

What Bloomberg’s Economist Says

“We don’t believe that the Bank of Ghana has ended its rate-cutting cycle, in place since November 2016, but further cuts are likely to predicated on inflation easing further.

Another rate cut in September or November is a possibility.”

Credit: Bloomberg

( By Ekow Dontoh and Andre Janse Van Vuuren With assistance by Simbarashe Gumbo, and Prinesha Naidoo )