The cost of borrowing may marginally go down as the Monetary Policy Committee (MPC) of the Bank of Ghana has maintained the policy rate at 29.5 percent.
This is the first time in 2023 that the Central Bank is maintaining the key rate.
The Monetary Policy Rate, which is of keen interest to businesses, signals the rate at which the Central Bank will lend to commercial banks.
Speaking at a press conference on Monday, May 22, the Chairman of the MPC and Governor of the Bank of Ghana, Dr. Ernest Addison explained that the stay of the rate is aimed at quickening the disinflation process.
“The Committee further noted the significant decline in headline inflation from the beginning of the year of more than 12.0 percent. The percentage of items in the CPI basket with inflation of more than 50 percent and above is receding, an indication of a strong return to the disinflation path. This is also supported by core inflation, which is also easing at a fast pace.”
“The tight monetary policy through additional liquidity management operations to address excess liquidity conditions in the market, relative stability in the local currency, and easing of ex-pump petroleum prices have supported the disinflation process. Furthermore, the Bank of Ghana has signed the Memorandum of Understanding on zero financing to the budget to eliminate fiscal dominance and allow for a faster ease in inflation towards the target band. These policies should provide the much-needed anchor to reinforce the disinflation process and reset the economy on the path of recovery.”
“Given these considerations, the MPC decided to maintain the Monetary Policy Rate at 29.5 percent,” Dr. Addison added.