Coronavirus pushes BoG to hold policy rate at 14.5 %
The Bank of Ghana (BoG) has maintained its benchmark policy rate at 14.5% following a cut in early March to contain COVID-19 pressures by increasing liquidity.
The Monetary Policy Rate (MPR) is the rate at which central banks lend money to commercial banks. This is expected to reflect on interest rates on loans to customers.
At a press conference on Friday, May 15, BoG Governor, Dr Ernest Addison stated that under the current circumstances and given the balance of risks to inflation and growth, the Monetary Policy Committee decided to keep the policy rate unchanged at 14.5 %.
The government is planning financial support for businesses to stimulate economic growth but faces inflation challenges as production resumes after a brief break during a three-week lockdown.
Dr Addison also stated that relief measures on water and electricity tariffs and declining crude oil prices are likely to ease price pressures in the outlook.
On the growth outlook, baseline projections show a sharp downturn in gross domestic product (GDP) growth with the economy operating below capacity in the medium-term due to the impact of the COVID-19.
He said the COVID-19 pandemic has put a severe strain on the budget, manifesting in petroleum revenue shortfalls as a result of plunging crude oil prices, shortfalls in import duties and other tax and non-tax revenues.