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BoG Maintains Policy Rate at 27% to Anchor Inflation Expectations
The Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) has retained the policy rate at 27%, following a reduction from 29% in September 2024. The decision, announced on Friday, November 29, 2024, aims to stabilize inflation expectations and mitigate exchange rate volatilities amidst ongoing economic pressures.
According to the MPC, inflationary trends remain elevated, primarily due to persistent increases in food prices, exchange rate pass-through effects, rising fuel costs, and utility tariff adjustments.
“Inflation projections show a slightly elevated profile driven by high and unstable food prices, pass-through of previous exchange rate pressures, fuel prices and utility tariff adjustments. The price increases in food items have been steep in the course and together with a fast-paced depreciating currency earlier on in the year have altered the inflation trajectory and stalled the disinflation process,” the MPC stated in its press statement.
Currency Depreciation and IMF Program Alignment
The committee highlighted the critical need to manage the impact of currency depreciation on long-term inflation expectations. Although current monetary policies align with the International Monetary Fund (IMF) program, sustaining macroeconomic stability remains a priority.
“At the time of the last MPC meeting, average inflation forecast a year ahead which stood at 19.0 percent has increased slightly to 20.1 percent at this forecast round. The horizon for inflation to get back within the target band of 6-10 percent has slightly shifted forward to Q4 2025 from the original forecast period of Q3 2025,” the statement noted.
The MPC further emphasized that near-term stability of the cedi would be crucial in achieving the desired inflation trajectory.
Economic Outlook
The BoG says it remains committed to implementing measures that safeguard price stability while supporting economic growth. With inflationary pressures and exchange rate fluctuations influencing the economy, the decision to maintain the policy rate underscores the need for cautious monetary policy.
The next MPC meeting is expected to provide further updates on Ghana’s economic performance and its alignment with fiscal and monetary stabilization efforts.
