Ghana Monetary Policy January 2018


Ghana: Bank of Ghana holds policy rate unchanged, surprising market analysts

January 22, 2018

An upward trend in inflation over the past three months prompted the Bank of Ghana to keep its monetary policy rate on hold at 20.00% at its first meeting of 2018 held on 22 January. The Bank’s decision came as a surprise to market analysts, who had expected a rate cut of 25 basis points.

Driven primarily by higher domestic food prices and the ascent in global oil prices, inflation ticked up for the third consecutive month, to 11.8% in December (November: 11.7%), inching further up from the medium-term inflation target of 8.0% plus or minus 2.0%. Core inflation in December matched November’s 12.6%, following a decline to 12.3% in October, and indicating increased demand pressures in the final two months of the year. While inflation expectations are thought to be well-anchored, a pick-up in price pressures at the end of 2017 motivated the Bank to stay put.

Economic growth is expected to have stayed robust in the fourth quarter following a jump in annual GDP growth to a three-year high of 9.3% in the third quarter, underpinned by a boost in oil production and an acceleration in growth in the non-oil sector. The pace of expansion is, however, likely to have moderated from the previous quarter due to a waning base effect. The strong growth momentum is expected to spillover over into 2018.

Devoid of any forward guidance, the Bank’s statement reiterated its aim of achieving the medium-term inflation target of 8.0% plus or minus 2.0% this year. FocusEconomics panelists see inflation moderating in 2018 but foresee it hovering above the Bank’s target band. The next monetary policy meeting is scheduled for 21 March, with the decision to be released on 26 March.

Ghana Interest Rate Forecast

FocusEconomics Consensus Forecast panelists expect the monetary policy rate to end 2018 at 16.6% and 2019 at 14.5%.


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Ghana Monetary Policy Chart

Ghana Monetary Policy December 2017 0

Note: Monetary Policy Rate in %.
Source: Bank of Ghana (BOG).

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