The Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) has maintained the policy rate at 14.5% percent.
This is the second time the Central Bank has maintained the rate after increasing it by 100 basis points in November 2021.
The rate, which is of keen interest to businesses, does not only signal the rate at which the Central Bank will lend to commercial banks; it also subsequently influences average lending rates on loans to individuals and businesses.
In a statement issued by the Central Bank, Governor, Dr. Ernest Addison, attributed the decision to maintain the key rate to mainly the 20 percent cut in government expenditure, which it expects to help lessen the upside risks to the inflation outlook.
“The key risks to the inflation outlook include: rising crude oil prices and its transmission to ex-pump petroleum prices and transportation costs, rising global inflation, food price uncertainties, and the fiscal outlook. The Monetary Policy Committee envisaged this scenario when it raised the policy rate in November 2021 to contain the inherent aggregate demand pressures likely to drive prices in the outlook.
“The Committee is of the view that the dynamics associated with the November 2021 policy rate hike are yet to be fully transmitted and expects the decisive implementation of the fiscal correction measures, especially the 20 percent cut in expenditure, to help moderate the upside risks to the inflation outlook. The Committee will continue to monitor the impact of these policy measures and as needed, call an extraordinary meeting to re-assess the inflation outlook over the forecast horizon and take the necessary policy decisions accordingly,” the statement noted.