The Monetary Policy Committee of the Bank of Ghana has maintained its policy rate at 22 percent.
[contextly_sidebar id=”2ifReOm3vvHTmvMywQrIGw4QGcYLDyZu”]The Committee attributed its hold to the recovery of the cedi as well as underlying inflationary pressures which is evident in the country’s current inflation rate which is at 17.1 percent after recording 16.9 percent in May.
The policy rate which is the rate at which the central bank lends to commercial banks and is also used by banks to calculate their base rates hit 22 percent in May this year the highest since December, 2003 when the rate was at 21.50 percent.
Briefing journalists this morning Governor of the bank of Ghana explained further why the rate was maintained.
“Inflation continued to rise since the last MPC round. Headline inflation moved up from 16.7 percent in March to 16.9 percent in May 2015. This price development is largely influenced by the pass-through of the currency depreciation and continuing cost-push inflation. Furthermore, core inflation (CPI excluding energy and utilities) continued to rise, signaling underlying inflation pressures.”
He added that ‘the Committee observed that though inflation and inflation expectations were still elevated, the pressures in the outlook for the medium-term were waning. This is as a result of the tight monetary policy stance, continuing fiscal consolidation and the recent recovery of the cedi.”
Many economists including lecturer at the University of Ghana Business School, Dr Godfred Bokpin had earlier projected that the Monetary Policy Committee of the Bank of Ghana will maintain the policy rate against the backdrop of the cedi’s recovery and developments in the economy.
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By: Vivian Kai Lokko/citifmonline.com/Ghana