The Monetary Policy Committee of the Bank of Ghana has voted to maintain the policy rate at 16 percent for the third time running.
The central bank’s decision, the Governor explained at a news conference, is due to the risk of inflation jumping beyond the bank’s 8-10 percent medium-term target.
Although inflation reduced from 9.6 percent in May to 9.1 percent in June, the Committee was of the view that it had to make a decision that would safeguard price stability.
Given the recent stability in consumer prices, as per the Bank’s own admission, and the relative stability in the cedi’s performance after the first quarter of the year, reducing the policy was not entirely on the table.
Analysts believe that foreign investors in local bonds will be forced to sell off their bonds had the policy rate being reduced which would have translated into lower yields on these bonds.