For the third straight time, the Bank of Ghana (BoG) has decided to keep the Monetary Policy Rate at 29 percent.
The Monetary Policy Rate is the key interest rate set by the Central Bank, determining the rate at which commercial banks borrow from it. This rate is crucial for influencing short-term interest rates and managing the money supply in the economy.
Consequently, the reference rate for commercial bank lending remains unchanged at 29 percent.
Following the 119th committee meeting on Friday, BoG Governor Dr. Ernest Addison announced the decision to maintain the rate.
He explained that while core inflation measures and expectations are trending downward, caution is warranted due to ongoing uncertainties in macroeconomic indicators.
“”GDP growth outturn for the first quarter of 2024 was stronger than expected. Economic activity remained resilient in the context of a generally tight policy stance. This is shown by the latest GDP data released by the Ghana Statistical Service and the subsequent upward revision of growth estimates. Similarly, high-frequency indicators of economic activity, which are more recent, suggest stronger growth outcomes.
“Consumer and business confidence sentiments softened, driven by the rapid exchange rate depreciation observed in May and high food prices in June 2024. As the exchange rate stabilises and macroeconomic stability takes hold, the reversal of these sentiments will further help support economic activity.”
“Even though inflation is expected to remain within the target year path, the risks are tilted slightly on the upside. This will require maintaining a strong monetary policy stance supported by strong fiscal consolidation efforts, including remaining vigilant to ensure that the end-year inflation objectives are achieved.
“Given these considerations, the Committee decided to maintain the policy rate at 29 percent,” he stated.