Bank of Ghana Maintains Monetary Policy Rate at 16%

Although inflation rate in Ghana rose to 9.5 percent in April 2019, from 9.3 percent in the previous month, the Bank of Ghana (BoG) has maintained its policy rate at 16%, reflecting pass-through effects from the recent currency depreciation. In January this year, the BoG made a surprise policy rate cut to 16% which resulted in a sharp depreciation of the Ghana Cedi against the US Dollar. The Bank of Ghana governor Dr. Ernest Addison said in a press release; “The Bank’s updated Composite Index of Economic Activity (CIEA) also shows evidence of increased economic activity with a yearly growth of 4.0 per cent in March 2019, up from 2.9 per cent a year earlier.”

“This robust pace of economic activity is supported by improved sentiments from businesses following the Ghana Cedi’s recovery from the recent sharp depreciation and favourable growth prospects, even though consumer sentiments weakened slightly as a result of recent increases in prices” he continued. The BoG said in the year to 23 May 2019, the Ghana Cedi cumulatively depreciated by 5.8 per cent, compared with 0.2 per cent for the corresponding period of 2018. Against the British Pound and Euro, the Ghana cedi cumulatively depreciated by 4.7 per cent and 3.3 per cent, respectively, compared with 1.4 per cent and 2.6 per cent appreciation, respectively, over the same corresponding periods.

Dr. Addison added that the central bank will continue to monitor the inflation rate, even though April’s inflation rate falls within the government’s target band of 6 to 10%.

“The Committee will continue to closely monitor both global and domestic developments and stands ready to take appropriate measures if necessary to maintain price stability.”