Ghana: Bank of Ghana keeps policy rate unchanged in September
September 19, 2016
At its 16 September monetary policy meeting, the Bank of Ghana (BOG) decided to keep its monetary policy rate unchanged at 26.00%, the highest level on record. The decision met market expectations and came amid easing inflation, though this edged up slightly in August compared to July’s 16-month low.
The Bank commented that July’s slowdown was mainly attributable to a decrease in the non-food category of the consumer price index (CPI), while August’s acceleration was the consequence of a downward revision to the value of petroleum products in the index one year ago. The Bank further noted that inflation still far exceeds the Bank’s medium-term objective of 8.0% plus/minus 2.0 percentage points. However, it suggested that monetary and fiscal tightening, together with foreign exchange market stability, will support the process of easing inflation.
Regarding the real economy, the Bank stated that growth conditions are expected to show signs of improvement due to an expanding power sector and an increase in gas and oil production. Nevertheless, the necessary fiscal consolidation could weigh on Ghanaian growth prospects, especially in a low-oil-price environment. The next policy meeting is scheduled for 18 November.
Author: Andrea Vetrugno, Economist