The Monetary Policy Committee (MPC) of the Bank of Ghana has commenced the 130th meeting to consider the health of the economy and also make a decision on the policy rate, which currently stands at 14.0 percent.
Speaking at an opening meeting, Governor, Dr. Johnson Asiama charged the committee to consider policies that will address the concerns of credit expansion to businesses.
He also identified a prolonged Middle-East risk to Ghana’s economy, cautioning that there are vulnerabilities that must be addressed to sustain the country’s economic growth.
“The Monetary Policy Committee has several substantive issues to address at this meeting. These issues range from realigning the entire interest rate structure in the economy as inflation remains low at 3.4 percent to addressing policies to ensure inflation expectations do not become dislodged”, he said.
He pointed out that the combination of domestic energy supply disruptions and external commodity price pressures could create a dual-channel inflation expectations problem.
“Looking forward, the economy will need a strong banking sector, and steps will be needed to ensure that the financial stability concerns are protected and the banking system is made to deliver on credit expansion”, he said.
Highlighting some potential risks to the economy, Dr. Asiama saidthere are a number of threats in the outlook of concern.
He stated that some of the risks are already materialising while others remain contingent.
He cited for example that the protracted Middle East conflict, sustained energy price elevation, the convergence of domestic energy supply disruptions and external cost-push pressures risks; if not addressed could dislodge inflation expectations before they are firmly anchored.
He added that there are other threats such as current account and reserve vulnerability issues, fiscal risks from external revenue compression and the domestic power crises.
“These risks will be central to the discussions this week”, he said.
