The Monetary Policy Committee (MPC) of the Bank of Ghana has decided to keep the monetary policy rate unchanged at 16 percent, a sixth consecutive period running.
At a media briefing, the Governor of the central bank, Dr Ernest Addison said, “the Committee viewed risks to the inflation and growth outlook as broadly balanced, and therefore decided to keep the Monetary Policy Rate unchanged at 16.0 percent, while standing ready to take decisive policy actions when necessary to ensure that inflation remains within the target band.”
Inflation at the end of 2019 stood at 7.9 percent declining from 8.2 percent recorded a month earlier.
Since the rebasing of the consumer price index in August 2019, during which inflation was at 7.8 percent, headline consumer price inflation has remained well within the target band. In September 2019 it declined to 7.6 percent, then inched upwards in October and November 2019 to 7.7 percent and 8.2 percent respectively.
Data from the Bank shows that 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,” Dr. Addison said.
Fiscal policy has been a source of considerable stimulus, the Governor stated.
Dr. Addison said, “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.”
A poll of international financial and investment analysts conducted by Reuters anticipated that the central bank will maintain the policy rate, however, it projected that there will be a cut later in the year by 100 basis points to 15 percent.
The central bank already did some heavy lifting in easing rates over the past five years after a grueling International Monetary Fund austerity program. The benchmark MPR was in recent years one of the highest on the continent, touching a high of 26 percent in 2016.
(By Joshua Amlanu)