Unchanged monetary policy rate to support cedi recovery, ensure external sector stability – Deloitte
Deloitte West Africa has indicated that the decision by the Monetary Policy Committee of the Bank of Ghana to keep the policy rate at 27% will anchor inflation expectations despite short-term pressures.
The professional services firm also believed that the maintenance of the policy rate would support the cedi recovery and ensure external sector stability.
In its economic brief centered on the Monetary Policy Rate (MPR) in Ghana and Nigeria, it also said the implication of the unchanged policy rate would boost business and consumer confidence.
The MPC of the Bank of Ghana cited a slightly elevated inflation despite a rebound in the stability of the Ghana cedi and a stable domestic economy as the rationale behind the unchanged policy rate of 27.0%.
Deloitte is optimistic the policy rate will support economic growth and prevent inflation from rising.
On the outlook, it expressed hope that the Ghanaian economy will pick up, driven by rising business confidence and economic activities.
It furthered that the continued International Monetary Fund support will bolster macroeconomic stability and recovery.
Higher Fuel Prices Impacting Cost of Production in Nigeria
In Nigeria, the MPC raised the MPR to 27.50% for the 6th time since January 2024, amidst rising inflation.
The concerns were higher fuel prices impacting the cost of production and distribution costs, persistent exchange rate pressure, reflecting high forex demand and elevated core inflation.
Deloitte warned that there will be an implication of further squeeze in disposable income, reduced money supply but tighter credit access and increased cost of borrowing and loan defaults.
Meanwhile, the professional services firm is upbeat about the banking system resilience despite exogenous and endogenous macroeconomic headwinds.