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Ghana Monetary Policy September 2019

Ghana: Bank of Ghana leaves key policy rate unchanged in September

On 20 September, the Monetary Policy Committee (MPC) of the Bank of Ghana (BOG) announced it had decided to hold its key policy rate at 16.00% for the fourth consecutive session. The Bank surprised markets in January when it decided to cut the rate to a five-year low.

Sustained domestic growth and an uptick in inflationary pressures led the decision to keep interest rates unchanged. Domestic activity has remained strong and the medium-run outlook is encouraging amid prospects of improved business sentiment and higher production in the oil, gas and mining sectors. On the price front, core inflation and inflation expectations rose slightly in August, due to an upward revision of utility tariffs, ex-pump prices and transport fares. However, due to a recent revision of the consumer price index and a change of the base year to 2018, headline inflation eased somewhat, moving it below the target range of 8.0% plus minus 2.0 percentage points.

Looking ahead, the MPC provided little forward guidance. On the one hand, it noted that global accommodative interest rates, relative stability in the exchange rate and domestic inflation developments have provided some space for easing. However, concerns remain about the fiscal deficit, which pose risks to macroeconomic stability and could add to inflationary pressures, thus limiting the room for monetary policy.

The next MPC meeting is scheduled for 20–22 November, with the decision set to be released on 25 November.

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