GCB Capital Research projects retention of 30% policy rate till end of 2023
As the nation awaits the impending announcement of a new policy rate on Monday, financial experts and stakeholders are bracing themselves for the possibility of a status quo decision, which they believe will lend further impetus to the ongoing disinflation trend in the economy.
This anticipation coincides with the commencement of the routine meetings of the Monetary Policy Committee (MPC) of the Central Bank, tasked with a comprehensive evaluation of the nation’s economic landscape.
In their previous meeting in July 2023, the MPC had opted to increase the policy rate by 50 basis points, setting it at 30 percent. However, the recent easing of inflation to 40.1 percent has prompted expectations that the policy rate may remain unchanged until the year’s end.
The marginal decline in the inflation rate, marking the first such reduction in three months since the upward trend commenced in May, has fueled optimism. GCB Capital has suggested that this declining trend, coupled with favorable base effects, may lead to a continued reduction in inflation through the fourth quarter of 2023.
According to GCB Capital, “Thus, we expect the Monetary Policy Committee to maintain a rate-neutral stance through 2023, with the policy stance likely to pivot in Q1 2024 once inflation eases sufficiently.”
The 114th meeting of the MPC of the Bank of Ghana is poised to deliberate on strategies to ensure enduring financial and economic stability, with the pivotal policy rate decision at the forefront, aimed at curbing inflation and upholding price stability.
