The Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) has maintained the monetary policy rate at 14 per cent for the second consecutive meeting this year.
The Committee said the decision reflected heightened global uncertainty despite continued improvements in Ghana’s macroeconomic indicators.
Announcing the decision after the 131st regular meeting of the MPC, Dr Johnson Asiama, Governor of the BoG, said the Committee unanimously voted to retain the benchmark rate at 14 per cent.
“The Committee judges that the current policy stance remains appropriate to guide inflation into the medium-term target band while allowing time to assess the evolving geopolitical developments and their potential impact on the domestic economy,” he said.
Dr Asiama said the decision followed a comprehensive assessment of recent economic developments and the risks to inflation and economic growth.
He said renewed conflict in the Middle East had disrupted trade routes, increased volatility in global energy markets and heightened uncertainty over global economic growth.
The Governor noted that inflationary pressures arising from the conflict had prompted several central banks to pause interest rate reductions, with any further escalation likely to tighten global financial conditions and affect emerging economies through trade and financial channels.
On the domestic economy, Dr Asiama said the Committee observed robust first-quarter Gross Domestic Product (GDP) growth and stronger economic activity.
He said the Bank’s Composite Index of Economic Activity pointed to sustained economic momentum, supported by improved business and consumer confidence.
“An easing credit environment has also fed into this momentum, with private sector credit growth surging sharply compared with the same period last year – a trend the MPC expects to further boost economic activity going forward,” he stated.
Dr Asiama said the Committee also noted improvements in Ghana’s trade balance and adequate international reserve buffers, which would help the economy withstand external shocks.
On inflation, he said recent data showed headline inflation moving closer to the lower limit of the Bank’s medium-term target band, largely due to base effects.
“The Bank’s July forecast round left its outlook broadly unchanged from the previous quarter, with headline inflation still expected to rise gradually back toward the target band over coming months,” he said.
Dr Asiama identified possible increases in utility tariffs and higher crude oil prices resulting from tensions in the Middle East as key upside risks to the inflation outlook.
He said continued fiscal consolidation and an appropriately calibrated monetary policy stance were expected to help contain those risks over the medium term.
Source: GNA
