The Monetary Policy Committee of the Bank of Ghana has once again maintained the policy rate at 26 percent.
This is the fourth consecutive time the Committee is maintaining the rate at 26 percent since January this year.
Addressing the media at the concluding part of the 72nd meeting of the MPC, Governor of the Central Bank, Dr. Abdul Nashir Issahaku attributed the decision to the stability in inflation for the period.
“In assessing the current economic conditions, the Committee noted the moderation in headline inflation since the July meeting on the back of continued cedi stability, easing inflation pressures, and tight credit conditions which implicitly reflect continued monetary policy tightness. In the light of these assessments, the Committee decided to maintain the monetary policy rate at 26 percent.”
Though the country’s inflation has increased to 16.9 percent in August 2016, from the 16.7 percent recorded the month before, Dr. Issahaku believes it formed part of the basis to maintain the rate at 26 percent.
“The Committee will continue to monitor developments in the economy and take appropriate actions, if necessary, towards attaining the medium-term inflation target over the forecast horizon” Dr. Issahaku stated.
In addition, the central bank has been unable to meet its inflation target of 8 percent plus or minus 2 percent.
“Despite these positive developments, the Committee observed that the current level of inflation is still high compared to the medium term target.”
At the last meeting in July, the Governor announced that the central bank has shifted the forecast for single digit inflation to the third quarter of 2017.
Economist, Dr. Lord Mensah earlier told Citi Business News he did not expect a change in the policy rate.
“I do not think that now that we are drawing closer to the fourth quarter and the festive season, the MPC will be prepared to reduce the policy rate as there will be pressure on the demand for the dollar. So I am expecting that if we have that reserves, then the MPC will then look at it and maintain the rates,” he stated.
Dr. Mensah further stressed, “If the government realizes its desperation for funds, then I don’t think that they would want to reduce the rates.”
The Bank of Ghana last increased the policy rate in November 2015.
The rate was increased from 25 percent in September to 26 percent in November 2015 and since then has been maintained in five MPC meetings since January 2016.
By: Norvan Acquah-Hayford/citibusinessnews.com/Ghana