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Ghana central bank keeps benchmark monetary policy rate at 26 pct

Xinhua, September 20, 2016 Adjust font size:

Ghana's central bank has for the fourth time retained its benchmark Monetary Policy Rate at 26 percent, to combat the high inflationary trends, governor of the bank Abdul-Nashiru Issahaku announced here on Monday.

He explained to the media after the 72nd Regular meeting of the Monetary Policy Committee (MPC) that inflation, which even though fell from 18.2 percent in June to 16.9 percent in August, was too high in spite of some positive signs in the economy.

The policy rate was raised to current levels in November 2015 due to rising inflation and fast depreciation of the local cedi currency.

"The Committee observed that the current level of inflation is still high compared to the medium term target. In the light of these assessments, the Committee decided to maintain the monetary policy rate at 26 percent," Issahaku announced.

The Committee attributed the moderation in headline inflation since July to the continued cedi stability; easing inflation pressures; and tight credit conditions which implicitly reflect continued monetary policy tightness.

The upside risks to the inflation outlook, according to the bank were the unanticipated shocks, especially with regards to the intermittent upward adjustments in petroleum and utility prices, and their second round effects.

The governor was positive about continued stability of the local currency on the back of continued policy tightness; proceeds from the recently issued 750 million U.S Dollars Eurobond; inflows from donors and the pre-export finance facility for cocoa.

The local currency according to the governor has been relatively stable, depreciating cumulatively by 4.1 percent from January 2016 to September 2016 compared with the 16 percent depreciation over the same period last year.

The MPC also expects growth conditions to improve over the medium term supported by the sustained improvement in the power sector and increased oil and gas production. However, it could still be jeopardized by tighter fiscal consolidation, declining private sector credit and delayed recovery in commodity prices. Endit