Governor of the Central Bank, Dr Ernest Addison, has assured of the return of headline inflation from the current 10.5 per cent to the Central Bank’s medium target band of 8+-2 per cent.
This, the Governor asserts will take place by the second quarter of 2021.
“Latest forecasts show improved inflation outlook and in the absence of unanticipated shocks, inflation should return to the medium target of 8+-2 per cent by second quarter of 2021,” he asserted at the Central Bank’s 96th MPC press briefing.
According to Dr Ernest Addison, this is on the account of the easing of Covid-19 food related price pressures and continued stability in the exchange rate, indicating a gradual and steady return to inflation target.
In addition, the Governor noted that despite prospects of a good economic recovery, monetary and fiscal policies implemented to mitigate the adverse impacts of the pandemic has resulted in the country straying from the path of fiscal consolidation.
He therefore called for feasible fiscal adjustments to stabilize the country’s debt, stating that if not done, it could pose risks to the long term macroeconomic stability.
“Drivers of economic growth are returning to normal with prospects of good recovery. Monetary and fiscal policies have been supportive, providing the necessary underpinnings for the economy to withstand the negative shock arising from the pandemic. However this has come at the cost of moving away from the consolidation path and this could pose a risk to long term macroeconomic stability if decisive measures are not taken to define the feasible fiscal adjustments to stabilize the country’s debt,” he stated.
Meanwhile, the Central Bank at its 96th MPC press briefing today, maintained the Monetary Policy Rate (MPR) at 14.5 per cent.
