The Monetary Policy Committee (MPC) has increased the Policy Rate again to 24.5 per cent from the 22 per cent.
This was announced by the Governor of the Bank of Ghana (BoG), Dr Ernest Addison at the 108th MPC press conference in Accra on Thursday October 6.
Dr Addison explained that on the fiscal situation, while expenditures have been broadly on target, revenue performance has been below expectations, complicating fiscal policy implementation.
Financing of the budget so far has predominantly been from the banking sector with
the central bank absorbing a larger share.
Persistent uncovered auctions and portfolio reversals by non-resident investors continue to pose risks to financing of the budget, resulting in monetization of the budget deficit by the central bank.
The Monetary Policy Committee recognizes the fact that the current condition is sub-optimal and will be interim until agreements are reached on an IMF-supported programme.
The Committee assesses that the engagement with IMF has been positive and early
conclusion of the programme discussions will help re-anchor stability.
“The outlook for the Ghana Cedi has improved, aided by the recent disbursement of
the loan from Afreximbank of US$750 million, the signing of the syndicated Cocoa
Loan of US$1.13 million, and the agreement with gold and oil companies to purchase
the repatriated foreign exchange earnings of about US$83.9 million so far, will help
stabilise the exchange rate,” he stated.
Inflation remains elevated and the balance of risks is on the upside. Although the
forecasts are for monthly inflation to continue to slow down, the risks are on the
upside, emanating largely from pass-through effects of the currency depreciation, the
recent upward adjustment in utility tariffs, and rising inflation expectations.
The Committee remains committed to re-anchoring inflation expectations and returning to
a disinflation path.
“Under the circumstances, the MPC decided to increase the Monetary Policy Rate by
250 basis points to 24.5 percent,” he stressed.
