Ghana Monetary Policy January 2016


Ghana: Bank of Ghana keeps policy rate unchanged in January

January 25, 2016

At its 25 January monetary policy meeting, the Bank of Ghana (BOG) decided to keep its monetary policy rate unchanged at 26.00%. The policy rate now stands at the highest level on record. The decision met market expectations and follows three consecutive meetings in which the Bank decided to increase the policy rate in an effort to fight high inflation.

On the domestic front, the Monetary Policy Committee (MPC) pointed out that challenges in the energy sector along with fiscal consolidation continue to drag on GDP growth. For the first eleven months of the year, the fiscal deficit was 5.6% of GDP, which was an improvement compared to the government’s target of 6.8% of GDP. The Bank added that external developments pose a significant risk to the domestic economy. The Committee commented that, “in the medium term, growth conditions are expected to recover, supported by a sustained improvement in the energy situation, anticipated increased production of oil and gas and a general improvement in the macroeconomic environment.”

In December, inflation inched up from November’s 17.6% to 17.7%. Looking forward, the Bank considers that, “there are upside risks to the inflation outlook which include uncertainties regarding the second round effects of the unanticipated petroleum price adjustments, exchange rate developments as well as worsening external financing conditions.”

FocusEconomics Consensus Forecast panelists expect the monetary policy rate to end 2016 at 20.25%. For 2017, panelists project that the monetary policy rate will end the year at 18.33%.

Author:, Senior Economist

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Ghana Monetary Policy Chart

Ghana Monetary Policy January 2016 1

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

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