As the Bank of Bank of Ghana (BoG) prepares to make major pronouncements on its assessment of the Ghanaian economy today [May 22], some economists are forecasting a marginal increase in the policy rate.
This comes amid calls from the International Monetary Fund (IMF) for the Bank of Ghana (BoG) to continue tightening monetary policy until inflation is firmly on a declining trajectory.
The Bank of Ghana at its last meeting increased the policy rate by 150 basis points to 29.5%, citing the need to anchor inflation expectations towards the medium-term target of 8±2 percent.
Economist Dr. Patrick Asuming in an interview with Citi Business News said:
“Though we have seen the inflation rate come down over these four months, it’s still way above the medium-term target. Also, the economy is in a very weak position. For instance, last year’s growth rate was below expectation and there are projections that the economy will be weaker this year. Also, the domestic debt exchange has really had an impact on the banks and the federal reserve also raised their rate recently. With all these considerations, there is a huge possibility that there could be a further increment.”
Research lead with GCB Capital, Courage Boti also projects a policy rate cut in the range of 50 to 100 basis points.
In his analysis of inflation and implications for interest rates and monetary policy, he maintained hope for continuous disinflation through 2023; supported by favourable base drift and easing price pressures from the primary drivers of inflation.
The Monetary Policy Committee (MPC) of the Bank of Ghana will announce its policy rate today as it concludes its 112th regular meeting for this year.
Today’s media briefing on the policy rate which will be addressed by the Governor of the central bank, Dr. Ernest Addison, is among other things expected to address some major issues affecting the economy.
Key among the issues to look out for is the central bank’s strategy to tame inflation which is currently at 41.2 percent.
Also, the central bank will outline efforts aimed at stabilizing the cedi, though it has been relatively more resilient against its major trading currencies in the first four months of 2023.