The Bank of Ghana (BoG) will hold its annual Monetary Policy Committee (MPC) meeting today, 20 September 2022, to review economic developments in the country.
The meeting will also ponder on the Monetary Policy Rate (MPR), which is of keen interest to businesses as it determines the rate at which the apex bank lends to commercial banks and subsequently influences the interest rates on loans.
At its last MPC meeting in August this year, the central bank increased the monetary policy rate by 300 basis points to hit 22 per cent.
It was an emergency intervention to address skyrocketing inflation.
Other pertinent issues, such as the depreciation of the cedi and measures to check the country’s declining foreign reserves, were also discussed.
The apex bank called for calm as it was exploring measures to address the falling cedi.
BoG identified five key reasons for the woes of the local currency at the MPC meeting in August.
It outlined the strength of the US dollar to the cedi, the impact of credit rating, and bonds, among others.
As a result, BoG introduced some measures to address the situation. These measures included;
- Gold Purchase Program to increase foreign exchange reserves.
- Special Foreign Exchange Auction for the Bulk Distribution Companys (BDCs) to help with the importation of petroleum products.
- Bank of Ghana is entering into a cooperation agreement with the mining companies to provide BOG with the opportunity to buy gold as when it becomes available.
- The Bank of Ghana is supporting the banking sector with foreign currency liquidity to help meet the demand for external payments.
- The recently approved USD750,000,000 Afriexim loan facility by Parliament, once disbursed, will boost the foreign exchange position of the country and help restore confidence.
- The Cocoa Loan is expected in the last quarter of the year. This facility will also help provide more foreign currency to help address the cedi depreciation.
- In the short term, we expect that when the IMF programme is finalized, it will also go a long way to help restore confidence in the economy and drive portfolio flows.
The BoG said these measures would go a long way to increase the foreign exchange reserve position of the central bank.
Currently, inflation has shot up to 33.9% in August 2022.
The Ghana Statistical Service (GSS) says the drivers of the rate of inflation were housing, water, electricity, gas and other fuels (46.7%); and transport (45.7%).
The MPC meeting will conclude with a press conference on Monday, 26 September 2022, to announce the decision of the committee.