Bank of Ghana
The Bank of Ghana (BoG) has for the fourth consecutive time maintained the monetary policy rate at 16 percent.
Governor of the Central Bank, Dr. Ernest Addison, made the announcement to journalists on Friday September 19, 2019, in Accra.
The policy rate is the rate at which the Central Bank lends to commercial banks.
On July 19, 2019, the Bank announced that it was maintaining the rate at 16 percent.
That was after it had maintained it at the same rate on April 1, 2019, and January 2019, respectively.
Maintaining at 16 percent, representing 100 basis points in January 2019 came about after it was reduced by 200 basis points in March 2018 from 20 percent to 18 percent, with the Bank saying at the time that the immediate risks to the disinflation path were well contained and the conditions then providing scope to translate some of the gains in the macro stability to the economy.
explaining why the rate was maintained again, the Governor said the core inflation and weighted inflation expectations all showed some uptick in August 2019.
He said this gives some indications of emerging pressures coming mainly from the recent upward adjustment of utility tariffs, ex-pump prices and transport fares.
The second round effects of these
administrative measures would have to be monitored closely over the next quarter, he stated.
“The fiscal situation remains a concern and strengthened efforts would be needed to close the deficit gap,” the Governor revealed.
“The Committee was concerned about the continued revenue weakness which requires expenditure adjustments
to contain a larger than projected budget deficit.”
He explained that “this will help underpin investor confidence in the Ghanaian economy and reduce the burden on monetary policy.”
Global conditions and inflation developments at home
have created some policy space for monetary policy which, however,
cannot be exploited in the current circumstances, according to him.
Looking ahead, he said, it was
expected that the full implementation of the new tax measures will likely
impact revenue performance in the last quarter to help achieve the fiscal deficit target set for the year.
BY Melvin Tarlue
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