The Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) has for the second time maintained its policy rate at 26 percent.
The bank late last year pegged the policy rate at 26 percent and maintained that rate during its first meeting for this year in January.
[contextly_sidebar id=”8MLUTWxtdapq76239r3mUX2baXq0HAhU”]The monetary rate is the rate at which the central bank lends to commercial banks, it also used by banks to calculate their base rate.
The central bank attributed the country’s current inflationary trends and stability in the energy sector as one of the main reasons on the hold.
Speaking to the press to announce the monetary rate Governor of the Bank of Ghana Dr Henry Wampah said the central bank will monitor developments and will make a review when need be.
“Price development since January MPC meetings show that headline inflation moved up significantly to 19% in January 2016 from 17.7 % in December 2015.
This was due to the impact of the hikes in utility tariffs and levies on petroleum products. In February, headline inflation declined to 18.5 %, tracked down by lower non-food inflation.
Core inflation excluding utility and energy prices has trended downwards since December 2015 pointing to some easing of underlying inflationary pressures.”
The drop in both headline and core inflation is encouraging but the current levels remain significantly above the medium term target of 8 plus or minus 2.
The latest survey of businesses, consumers and the financial sector show that the inflation expectations are still high driven largely by the upward adjustments of utility tariffs and petroleum prices.
Our focus indicate that barring any further shocks, the inflation will peak in the first quarter of 2016 and gradually decline thereafter towards the target band by mid 2017 still towards our January forecast,
The Governor added, “The January 2016 update of the banks composite index of economic activities point to some improvement in economic activities…
Despite that, general remain subdued it is anticipated that the turnaround in the energy situation, additional oil and gas production and improvement in macro-economic environment will further boost growth later in the year.”
By: Vivian Kai Lokko/Norvan Acquah – Hayford/citibusinessnews.com/Ghana