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Ghana's central bank maintains policy rate at 26 pct

Xinhua, January 26, 2016 Adjust font size:

The Monetary Policy Committee (MPC) of Ghana's central bank announced here on Monday its decision to keep its benchmark policy rate at 26 percent.

Henry Kofi Wampah, Governor of the Bank of Ghana (BOG), announced at a press conference that although the Core inflation (CPI inflation excluding energy and utility prices), which reflects underlying inflation, had continued to rise, it was at a slower pace.

"Going forward, the Committee expects the slower pace of price changes to continue and steer inflation down towards the medium target band of 8±2 percent," the governor stated.

However, there are upside risks to the inflation outlook, which Wampah said included uncertainties regarding the second round effects of the unanticipated petroleum price adjustments, exchange rate developments as well as worsening external financing conditions.

"These risks would however be moderated by lower crude oil prices and improvements in the energy situation," the governor maintained.

Contrary to indications of the bank's Composite Index of Economic Activity (CIEA) for November 2015 of a slower pace of growth, compared with the same period in 2014, Wampah was optimistic that growth would improve with the energy situation getting better and increased oil and gas production.

"These, notwithstanding, there are risks to the growth outlook. These include continuing tightness in the monetary and fiscal policy stance, weak consumer confidence, falling commodity prices and a slack in global growth," he added.

The 2015 budget implementation recorded a cash deficit of 5.6 percent of GDP against a target of 6.8 percent, which, if sustained, would help meet the medium term inflation target and growth targets in the long term, he said.

Ghana's cedi depreciated by 15.7 percent last year, compared with 31.3 percent recorded in 2014.

The governor added that risks from the global environment remained heightened, with outlook for the commodities market however showing that prices were unlikely to recover in the near term.

"In the light of this assessment, the Committee sees the risks to inflation and growth as balanced, and therefore decided to maintain the monetary policy rate at 26 percent," said the governor.

"The Committee wishes to reiterate that it stands by its price stability mandate and will continue to monitor developments in the economy and take appropriate actions if necessary." Enditem