The Bank of Ghana (BoG) has reaffirmed its commitment to a tight monetary policy until inflation shows a clear downward trend, aiming to bring it within the medium-term target of 8 ±2 per cent.
In a communique to the International Monetary Fund (IMF), the BoG emphasized that its policy decisions would be driven by data, ensuring a swift and orderly disinflation path.
The central bank also highlighted its readiness to adjust its policy stance as necessary to achieve this goal.
The BoG further outlined plans to continue absorbing excess liquidity and ensuring that the policy rate, currently held at 29%, is effectively transmitted to the market.
“Our policy decisions will continue to be data-dependent to ensure a fast-paced and orderly disinflation path towards the inflation target; the BoG stands ready to adjust the policy stance to ensure inflation evolves as envisaged under our monetary policy consultation clause (TMU Section II)”.
“We are committed to continue absorbing excess liquidity and making sure our policy rate is fully transmitted to the market. In doing so, we will review the increased reliance on reserve requirements and the new tiering framework to ensure they deliver on their objectives”, the bank said.
Additionally, the BoG is focused on enhancing its inflation targeting framework through improvements in its Forecast and Policy Analysis System (FPAS), better macroeconomic data collection including its inflation expectations survey, and more effective monetary policy communication.
Inflation, per the latest data released by the Ghana Statistical Service (GSS), stands at 20.9% for the month of July.
The Bank also intends to rebuild official international reserves to cover at least three months of imports by the end of the IMF programme.
Acknowledging challenges such as the difficulties in the cocoa sector, larger-than-expected payments to Independent Power Producers (IPPs), and uncertainties surrounding debt restructuring, the BoG has requested to the IMF, a modification to the Quantitative Performance Criteria (QPC) to include an asymmetric adjustor on debt service related to the restructuring of bondholders’ and commercial creditors’ claims.
