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Bank of Ghana cuts policy rate to 22.5%

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The Bank of Ghana today announced a cut to the policy rate by 100 basis points from 23.5 per cent to 22.5 per cent.

Addressing journalists at his first Monetary Policy Committee press conference since his appointment in March 2017, Dr. Ernest Addison said among others that the recently released GDP data from the Ghana Statistical Service showed that growth outcome for 2016 was slightly weaker than expected, mainly due to a significant decline in industrial growth following the adverse effects of the energy crises and operational challenges in crude oil production for most part of the year.

“The overall GDP growth for 2016 turned in at 3.5 per cent against an envisaged growth of 4.1 per cent,” he said.

He indicated that information from the updated Composite Index of Economic Activity (CIEA), suggests a faster pickup in economic activity during the first quarter of 2017, relative to the same period last year.

“Growth in the CIEA was mainly driven by private sector credit and exports. The Bank of Ghana’s business and consumer confidence surveys produced mixed results. While business confidence showed a marked rebound, driven in large part by their expectation of an improved macroeconomic environment, consumer confidence recorded a marginal dip driven by softening welfare sentiments,” he said.

According to the governor, the 2017 budget indicates a return to the path of fiscal consolidation. The reduction in the fiscal deficit for the year is expected to foster more stable macroeconomic conditions, he said, adding that rigorous and steadfast implementation of the budget will therefore be critical to the outlook.

“On inflation, the Committee noted that headline inflation, and inflation expectations have broadly trended downwards. The disinflation process has been supported by tight policy stance and exchange rate stability. With a stable outlook for exchange rate movements and return to the path of fiscal consolidation, headline inflation is expected to trend towards the medium-term target in 2018, barring any unanticipated shocks,” he said.

By Emmanuel K. Dogbevi

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