Policy rate kept at 13.5% despite inflationary pressures
The Bank of Ghana (BoG) has maintained increased its Monetary Policy Rate at 13.5 percent.
The BoG’s decision to maintain the policy rate was announced by Governor of the Bank of Ghana, Dr Ernest Addison on Monday, September 27, 2021.
In view of the Bank’s decision, lending rates by commercial banks to businesses is expected to remain in line with the announced policy rate.
According to Dr Addison, the decision by the Committee to keep the policy rate is due to the fact that inflation is fairly balanced against growth and is expected to remain within the Bank’s medium term target band, although inflation will be at the Bank’s upper band of its inflation target.
“Inflation has risen sharply driven by sustained food prices, food inflation has pushed overall inflation to the Bank’s upper band limit, but that notwithstanding core inflation remains subdued.
Latest inflation forecasts indicates inflation will remain within target band but closer to the upper limit band in the medium term in the absence of any other unexpected shocks. Hence a close monitoring of the inflation situation is warranted to prevent a second round effect increase in inflation from rising food inflation.
The Committee stands ready to respond to the situation as needed if this particular risk arises. Given these considerations and fairly balanced risks to inflation and growth and outlook, the Committee decided to keep the policy rate at 13.5%,” said Dr Addison.
