Central Bank Continues Pause On Rate Reduction As MPC Maintains Policy Rate At 29%
The Bank of Ghana (BoG) is continuing its pause on the reduction of the policy rate as the Monetary Policy Committee (MPC) headed by the Governor, Dr Ernest Addiosn, on Friday, July 26, 2024, announced the Central Bank’s policy rate to be 29%.
This marks the third consecutive time the policy rate of the Central Bank has been held steady.
A 100 basis points (1%) reduction to the current 29% policy rate was made in January this year, and since then the BoG has maintained its prime rate at 29%.
The decision comes after a thorough review of the country’s macroeconomic developments over the past two months.
The stability of the policy rate is anticipated to keep commercial banks’ lending rates to businesses unchanged, providing a consistent financial environment for corporate borrowers.
The policy rate decision as announced by the Governor at the 119th MPC press briefing underscores the Central Bank’s ongoing efforts to balance economic growth with inflation control in Ghana’s dynamic economic landscape.
Headline inflation per recent data from the Ghana Statistical Service (GSS) declined slightly to 22.8% from 23.1% in May, continuing its disinflation trend from January 2023.
Projections by the Central Bank further show that inflation will remain within the monetary policy consultation clause of 13-17% by the end of the year.
Announcing the policy rate at the 119th MPC press briefing, the Governor noted, “There is some uncertainty regarding the inflation path for the year, given recent exchange rate pressures, upward adjustment in utility tariffs and increases in ex-pump fuel prices.”
“The above developments have resulted in a slightly elevated inflation profile for the year. Even though inflation is expected to remain within the target year band, the risks are tilted slightly on the upside. This will require maintaining the strong monetary policy stance supported by strong fiscal consolidation efforts including remaining vigilant to ensure that the end-year inflation objectives are achieved.”
“Given these considerations, the Committee decided to maintain the policy rate at 29 percent,” he posited.
