Africa > West Africa > Ghana > Ghana Monetary Policy January 2016

Ghana: Ghana Monetary Policy January 2016

2016/01/28

At its 25 January monetary policy conference, the Bank of Ghana (BOG) decided to keep its monetary policy rate unchanged at 26.00%. The policy rate presently stands at the highest level on record. The decision met market expectations and follows three consecutive meetings in which the Bank decided to increase the policy rate in an effort to fight high inflation.

On the domestic front, the Monetary Policy Committee (MPC) pointed out that challenges in the energy sector along with fiscal consolidation continue to drag on GDP increase. For the initial eleven months of the year, the fiscal deficit was 5.6% of GDP, which was an development compared to the government’s target of 6.8% of GDP. The Bank added that external developments pose a significant risk to the domestic economy. The Committee commented that, “in the medium term, increase conditions are expected to recover, supported by a sustained development in the energy situation, anticipated increased production of oil and gas and a general development in the macroeconomic environment.”

In December, inflation inched up from November’s 17.6% to 17.7%. Looking forward, the Bank considers that, “there are upside risks to the inflation outlook which include uncertainties regarding the second round effects of the unanticipated petroleum price adjustments, exchange rate developments inclunding worsening external financing conditions.”
FocusEconomics Consensus Estimate panelists expect the monetary policy rate to end 2016 at 20.25%. For 2017, panelists project that the monetary policy rate will end the year at 18.33%.

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