The Bank of Ghana has affirmed its dedication to sustaining a stringent monetary policy until inflation shows a consistent downward trend.
In a statement to the International Monetary Fund, the Central Bank emphasized that its monetary policy is focused on returning inflation to its medium-term target of 8% ± 2%.
“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”, it further explained.
The Central Bank stated that it aims to strengthen its inflation targeting framework by upgrading its Forecast and Policy Analysis System (FPAS), improving macroeconomic data collection, including the BoG inflation expectations survey, enhancing analytical capabilities, and refining its monetary policy communication.
The Bank also plans to restore official international reserves to a minimum of three months of import cover by the end of the program.
“As the difficulties affecting the cocoa sector hamper its ability to accumulate reserves and that payments to IPPs [Independent Power Producers] are larger than previously expected, coupled with the uncertainty about the timing of the debt restructuring, we are also requesting a modification of the QPC to add an asymmetric adjustor on debt service on instruments arising from the restructuring of bondholders’ and commercial creditor’s claims”.
In light of the reserve accumulation goal and existing challenges, the Bank will stick to a gross foreign exchange intervention budget.
In July 2024, the Monetary Policy Committee of the Bank of Ghana maintained the policy rate at 29.0% for the third consecutive time.