Policy rate remains unchanged
The Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) has decided to maintain the West African second largest economy policy rate at 15 per cent, citing balanced to risks to inflation and growth outlook.
The policy rate is the rate at which the Central Bank does overnight lending to the universal banks in the country.
The Acting Governor of BoG, Dr. Henry Kofi Wampah, explained to journalists in Accra: “During the review period, inflation remained within the target range, given the tight monetary policy stance”.
The pass-through effects of exchange rate depreciation appear to be muted and there are positive indications that the impending harvest season will have a moderating effect on inflation in the next few months, he added.
According to him, the Bank’s end of year inflation forecast indicates that inflation will continue to remain within the target band.
Dr. Wampah, who is also the acting Chairman of the MPC, noted economic assessments at this MPC round point to a moderating growth outlook, in line with trend. However, uncertainties in the global economy can affect domestic growth prospects, he warned.
Reviewing the import dominated Ghanaian economy, Dr Wampah stated emphatically that indications were that real economic activity had been sustained, albeit at a much slower pace than last year.
Although business and consumer sentiments have softened, credit conditions to households have eased and credit to the private sector remained strong, providing a further boost to the growth outlook, he indicated.
While the pace of exchange rate depreciation has slowed down significantly, there are still underlying risks to the currency outlook from increased aggregate demand pressures. These pressures could be further intensified by the emerging challenges in the energy sector.
However, the Committee has observed that these risks could be muted by the expected cocoa syndicated loan of US$1.5 billion in the last quarter of 2012.
In addition, the assurances outlined in the Critical Policy Actions statement by H.E. the President to maintain discipline in government expenditure so that unplanned expenses are not incurred will complement the monetary policy stance of the Bank.
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