The Monetary Policy Committee(MPC) of the Bank of Ghana (BoG) has retained the rate it lends to commercial banks.
This means that the lending rate in the country will remain steady.
The MPC upheld the rate at 30 per cent after a meeting to review economic developments.
After 50 basis points hiked the rate in July 2023 due to inflationary pressures, the market turned towards policy rate retention on the back of the ease in inflation for August.
The Governor of the Bank of Ghana, Dr Ernest Addison, addressing the media on September 25, noted that the thinking behind maintaining the rate was influenced by the fact that all the macroeconomic indicators are responding to past measures to control inflation.
“Given these considerations, the Committee decided to maintain the policy rate at 30.0 per cent. The Committee further indicated that while the expectation is for continued disinflation, it stands ready to respond appropriately should inflation deviate from these broad expectations,” he said.
On inflation dynamics, Dr Addison explained that the continued maintenance of a tight monetary policy stance and relative exchange rate stability has contributed significantly to the disinflation process observed in the year thus far.
He announced that headline inflation has declined by a cumulative 14.0 per cent to 40.1 since the peak of 54.1 per cent recorded in December 2022.
He added that non-food inflation has also declined sharply by close to 20 per cent, broadly reflecting the effectiveness of the monetary policy.
“All core inflation measures, monitored by the central bank, are trending downwards, indicating continued easing of underlying inflationary pressures. In addition, one-year ahead survey-based inflation expectations seem well anchored”.
He added that while the disinflation process has resumed, it is expected to result in a gradual return towards the target band(6% to 10%) over the medium term, barring unanticipated shocks, rising international crude oil prices and adjustments to utility tariffs which remain a risk to the inflation outlook.
The MPC began its quarterly meeting on September 18, 2023.
Top on the agenda was the stabilization of the cedi and anchoring of inflation.
The Committee reviewed some business risk factors such as consumer and business confidence.
The meeting concluded with a press conference on Monday, September 25, 2023, to announce the decision of the Committee.