Bank of Ghana holds policy rate at 29%

The Bank of Ghana (BoG) has maintained its Monetary Policy Rate at 29 per cent, citing a slightly elevated inflation profile on account of recent exchange rate pressures and adjustments in transportation fares.

However, the Bank said the projections showed that inflation would remain within the monetary policy consultation clause of 13 to 17 per cent at the end of the year.

Dr Ernest Addison, Governor of the Central Bank, made the announcement during a press briefing following the Bank’s 118th Monetary Policy Committee meeting in Accra on Monday, May 27.

The decision to maintain the policy rate was reached after the Committee deliberated and assessed global and domestic macroeconomic developments for the first four-months of the year, and the balance of risks to the outlook, he said.

Dr Addison noted that the interbank weighted average rate remained within the policy corridor, increasing from 28.68 per cent in April 2024 from 25.89 per cent in April 2023.

In contrast, the average lending rates of banks declined marginally to 31.25 per cent in April 2024 from 31.66 per cent, recorded in the corresponding period of 2023.

“These forecasts are contingent on sustaining the tight monetary policy stance, including aggressive liquidity management operations,” the Central Bank Governor said.

Speaking about developments in the banking sector, he said the indicators pointed to a recovery from the impact of the Domestic Debt Exchange Programme (DDEP).

Total assets increased by 28.8 per cent to GH¢306.8 billion at the end of April 2024 driven by domestic currency deposits and other funding sources.

Also, banks reported higher profits for the first four months of 2024, relative to the same comparative period in 2023.

Regarding gross international reserves, the Governor said the country’s position remained strong, with a $6.59 billion stock of reserve, representing three months of import cover, compared with $5.91 billion – 2.7 months of import cover at the end-December 2023.

Nonetheless, on the country’s fiscal policy, he stated that expenditures outpaced revenue growth in the first quarter, reflecting the frontloading of IPP arrears payments.

“Maintaining strict fiscal discipline for the rest of the year will be crucial to strengthen confidence in the economy,” Dr Addison said.

Source: GNA

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