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Ghana central bank holds policy rate at 26 pct

Xinhua, July 19, 2016 Adjust font size:

Ghana's central bank has decided to maintain its benchmark policy rate at 26 percent, Governor Nashiru Issahaku announced here on Monday.

The decision, according to him, was taken during the 71st meeting of the Monetary Policy Committee (MPC) of the bank on Friday.

"In assessing the current economic conditions, the Committee viewed the risks to inflation and growth as balanced and decided to maintain the policy rate at 26 percent," the governor announced.

According to him, the increases in ex-pump prices of petroleum products have slowed the disinflation process, shifting slightly upwards the forecast zone of inflation.

"Headline inflation is likely to move within the medium-term target band of 8.0 percent plus two or minus two percent in the third quarter of 2017, against earlier projections of mid-2017," Issahaku stated.

He said the Committee remained committed to its price stability mandate and would continue to monitor developments in the economy and take further policy actions, if necessary.

The central bank also expects that the tight fiscal and monetary policies' stability in local cedi currency as well as a drop in food prices as a result of the coming in of food prices will anchor the disinflation process.

The governor pointed out that there were still risks to this prospect depending on how much petroleum prices and transport fares were increased.

He said the prospects of growth in the economy also remained largely positive for the rest of the year to be impacted by stability in the foreign exchange market, continued improvement in consumer and business sentiments, and the realization of additional oil and gas production from the new TEN oil field.

The local cedi currency, which had depreciated 26 percent the same period last year, depreciated 3.3 percent to the dollar since January compared 2016.

"We see exchange rate remaining broadly stable and not deviating from the current expectations.

"The tight credit conditions, electricity supply shortfalls and continued fiscal tightness may moderate the pace of economic expansion," the governor stated.

Ghana has been battling fiscal deficit and lower economic growth after 2011 saw nearly 15 percent growth n the economy due to the commencement of oil production.

It entered into a three-year program with the International Monetary Fund (IMF) to stabilize the economy and restore growth.

The relatively low commodity prices and reduced volume of exports affected the trade balance, causing a widening provisional trade deficit in the first half of 2016 compared with the same period last year. Endit