MPC keeps policy rate unchanged at 14.5%

The Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) has kept the policy rate unchanged at 14.5 per cent.

At a press conference in Accra on Monday January 31, Governor of the BoG Dr Ernest Addison said headline inflation has remained above the upper band of the medium-term target of 8±2 percent since September 2021.

Additionally, he said, all the core inflation measures, and inflation expectations have increased, which point to heightened underlying inflation pressures. The latest forecast shows that inflation would likely remain above target in the near-term, driven by both external and
domestic factors, and only return to target in about four-quarters ahead.

The key risks to the inflation outlook include: rising crude oil prices and its transmission to ex-pump petroleum prices and transportation costs, rising global inflation, food price uncertainties, and the fiscal outlook.

The Monetary Policy Committee envisaged this scenario when it raised the policy rate in November 2021 to contain the inherent aggregate demand pressures likely to drive prices in the outlook.

The Committee is of the view that the dynamics associated with the November 2021 policy rate hike are yet to be fully transmitted and expects the decisive implementation of the fiscal correction measures, especially the 20 percent cut in expenditure to help moderate the upside risks to the inflation outlook.

“The Committee will continue to monitor the impact of these policy measures and as needed call an extraordinary meeting to re-assess the inflation outlook over the forecast horizon and take the necessary policy decisions accordingly,” he said.