Ghana’s central bank on Thursday maintained its benchmark policy rate at 14 percent despite global uncertainties, marking the third time it has held the rate at that level since March.
Bank of Ghana Governor Johnson Asiama said during a periodic Monetary Policy Committee press briefing that there is a continued moderation of underlying inflation pressures despite upside risks to the disinflation process.
Asiama said the 5 percent inflation rate in August remains below the lower bound of the medium-term target band of between 6 percent and 10 percent and is projected to move into the band over the coming quarters, allowing enough room to leave the policy rate untouched.
According to him, despite the August inflation uptick, driven mainly by the pass-through of utility tariff adjustments and higher crude oil prices, “all the inflation expectations and core inflation measures eased, indicating a moderation in underlying inflation.”
Upside risks to the inflation outlook, Asiama said, include the increase in utility tariffs, rising petroleum prices that could lead to transport fare increases, the firming up of the U.S. dollar due to the U.S. interest rate hike, as well as possible spillovers from global supply chain constraints.
On the other hand, continued fiscal consolidation by the government, improved food supply conditions, and exchange rate stability present offsetting downside risks going forward, added the governor.
The International Monetary Fund (IMF) approved a new policy coordination instrument for the West African cocoa, gold, and crude oil exporter in July as a follow-up to the three-year extended credit facility-backed reforms which ended in May.
The ballooning inflation rate, which peaked at 54.1 percent in December 2022, was among the factors compelling Ghana to seek a 3-billion-dollar loan from the IMF in May 2023 to support planned reforms. Enditem
