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Ghana Monetary Policy July 2019

Ghana: Bank of Ghana holds key policy rate stable in July

On 19 July, the Monetary Policy Committee (MPC) of the Bank of Ghana (BOG) kept its key policy rate unchanged at a five-year low of 16.00%. The decision marked the third consecutive hold following January’s unexpected cut.

The Bank’s decision to stay put in July reflected easing price pressures and sustained momentum in domestic activity. Inflation in May–June slowed amid a drop in oil prices, thus remaining within the target range of 8.0% plus or minus 2.0 percentage points. Moreover, pass-through effects stemming from a slump in the cedi at the end of the first quarter have waned as the currency recovered thanks to an upbeat external sector.

Looking forward, the committee remarked that, although fiscal imbalances pose significant risks to macroeconomic stability, price stability appears to be “on track”. Inflation has remained within the target band for the last 15 months and is expected to soften ahead as exchange rate pass-through effects continue to wane. Nevertheless, a rate cut in the coming months remains possible, provided inflation falls as expected.

The next MPC meeting is scheduled for 17–19 September, with the decision set to be released on 20 September.

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