Mr. Kwesi Amissah-Arthur, Governor of Bank of Ghana
By: Daniel Nonor
The Bank of Ghana (BoG) has defied the call to reduce the prime rate, and maintained it at 13.5%.
The decision of the bank to maintain the rate was based on considerations such as the inflation outcome for the end of year, inflation outlook for 2011, recovery in economic activity, and the counterbalancing effects of the risks in the outlook.
Mr. Kwesi Bekoe Amissah-Arthur, Governor of the Bank of Ghana and Chairman of the Monetary Policy Committee (MPC), told journalists in Accra over the weekend, that since the last Monetary Policy Committee meeting in September, the Ghana Statistical Service (GSS) had produced two reports on inflation, which show that inflation stabilised at just below 9.4 per cent in September and October 2010, compared with 18 per cent in October 2009.
Within the components of inflation, food inflation turned in at 5.6 per cent (from 13.5 per cent a year ago), while non-food inflation was 11.8 per cent (having reached 21.1 per cent a year ago).
He added that of the overall 5.4 percentage points decline in inflation this year, the weighted contribution of the non-food sector was 3.9 per cent, while food contributed 1.5 per cent towards the decline.
Interest rates declined over the entire spectrum of the yield curve. Between August and November, the 91-day Treasury bill rate declined from 12.7 per cent to 12.3 per cent. The 182-day Treasury bill rate also declined from 13.1 to 12.7 per cent, Amissah-Arthur said.
According to the Governor, the rate on the 1-year note fell from 13.4 per cent to 12.72 per cent. That of the 2-year fixed rate note also dropped from 13.4 per cent to 12.75 per cent.
Amissah-Arthur was quick to observe that the 3-year instrument, which was at 14.2 per cent in August, went down to 13.3 per cent in November 2010.