Business News of Tuesday, 25 September 2018
The Monetary Policy Committee (MPC)of the Bank of Ghana has maintained the policy rate at 17 percent after its 84th meeting.
This is the second consecutive time that the central bank has maintained the policy rate.
Speaking at a press conference, Dr. Addison explained that the decision to hold the figure at 17 percent is aimed at helping the country achieve its inflation target by end of year.
“Given these considerations and weighing the balance of risks the committee decided to keep the policy rate unchanged but will continue to monitor closely developments in the coming months and take the appropriate policy actions to address any potential threats to the inflation outlook”, he said.
“The most recent forecasts, at this MPC round show some marginal elevation of the disinflation path taking into account the possible second round effects of the recent increases in petroleum prices, exchange rate depreciation, effects of recent increases in taxes, pick up in global inflation as well as the effects of the tight global financing conditions,” he added.
Responding to a question why the bank of Ghana did not increase the rate to help control the recent cedi depreciation, Dr. Addison stated that the focus of the central bank is inflation targeting and not exchange rate targeting.
Assuring that the cedi will stabilize, Dr. Addison pointed out that adequate measures have been put in place to stabilize the local currency.
“The outlook is for continued relatively stable macroeconomic conditions. The recently signed cocoa syndication loan of US$1.3 billion should bring in additional foreign exchange to further boost our international reserves and provide some cushion against any further pressures,” he stressed.
Dr. Addison was optimistic Ghana will also benefit from the recent sovereign credit rate upgrade by Standard and Poor’s which should lead to a reduction in Ghana’s sovereign risk premium, reduce the cost of borrowing and minimize rollover risks.