The Central Bank has maintained its monetary policy rate at 29.5%.
Policy rate hikes by the Central Bank since November last year stands at a cumulative figure of 1,250 basis points (12.5%).
The MPC’s decision to maintain the policy rate is due to the downward trend in the country’s headline inflation rate from 52% in January to 41.2% at end-April 2023.
The decision by the MPC is however, in contrast to the monetary policy tightening stance expected to be taken by the BoG as a condition to the implementation of the $3bn IMF programme.
Given the maintenance of the policy rate, interest rates on loans to the private sector is expected to remain the same with no additional increment in the costs of production by businesses in the country.
Announcing the new policy rate, the Governor of the Central Bank, Dr Ernest Addison, noted the Bank’s decision to maintain the policy rate is due to an indication of a strong return to disinflation path coupled with the signing of the Memorandum of Understanding on zero financing to the budget to eliminate fiscal dominance and allow for a faster ease in inflation towards the target band.
“The Committee further noted the significant decline in headline inflation from the beginning of the year of more than 12.0 percent. The percentage of items in the CPI basket with inflation of more than 50 percent and above is receding, an indication of a strong return to the disinflation path. This is also supported by core inflation, which is also easing at a fast pace. The tight monetary policy through additional liquidity management operations to address excess liquidity conditions in the market, relative stability in the local currency, and easing of ex-pump petroleum prices have supported the disinflation process.
“Furthermore, the Bank of Ghana has signed the Memorandum of Understanding on zero financing to the budget to eliminate fiscal dominance and allow for a faster ease in inflation towards the target band. These policies should provide the much-needed anchor to reinforce the disinflation process and reset the economy on the path of recovery.
“Given these considerations, the MPC decided to maintain the Monetary Policy Rate at 29.5 percent,” the Governor noted.
