The Bank of Ghana (BoG) yesterday reduced its policy rate- the rate at which commercial banks borrow from the Central Bank for onward lending to their customers, to 23.5 percent from 25.5 percent.
Dr Abdul-Nashiru Issahaku, Governor of the Bank of Ghana (BoG), who announced this, said the Monetary Policy Committee (MPC) of the bank dropped the rate by 200 basis points after considering declining inflation and other factors.
At a press conference in Accra, he said: “Headline inflation declined for the fifth consecutive month in February 2017. Inflation fell from 17.2 percent in September 2016 to 15.4 percent in December and further down to 13.2 percent in February 2017. The steady decline in consumer prices reflected in both food and non-food prices, driven mainly by the tight monetary policy stance and some base effects.
“Core inflation (CPI inflation excluding energy and utility prices) similarly eased over the period. Inflation expectations across all sectors, that is, consumers, businesses and the financial sector broadly declined. These trends imply dampening of underlying inflation pressures. The Bank’s latest forecasts indicate a continued downward trend towards the medium term inflation target of 8±2 in 2018. However, upside risks to the inflation outlook remain the impact of tighter global financial conditions and volatility in commodity prices,” the Governor stated.
The MPC kept the rate at 26 percent for most part of last year.
Global trends
The MPC projected the global economy was projected to pick up moderately in 2017 driven largely by the expected fiscal stimulus in the US, as well as recovery in the eurozone and emerging market economies.
“These projections may prompt a faster pace of monetary policy normalisation and in turn, further tightening of global financing conditions. In addition, there remains considerable uncertainty in the international commodities market. These developments could adversely impact Ghana’s balance of payments, exchange rate and the inflation outlook.”
Recent data
Latest economic and financial data from the Central Bank also said from $1272.8 million recorded in January 2017, total exports of commodities stood at $2489.5 million as at February this year, made up of $1176.4 million gold exports, $619 million cocoa exports and $378.8 million oil exports.
Imports
Total imports stood at $1916.5 million as at February this year comprising oil imports of $266.1 million and $1650.4 million non-oil imports.
Trade balance stood at $573.0 million as at February, this year.
Debt
Total public debt as at end of 2016 was $29.2 billion (GH¢122.3 billion), representing 72.5 percent of gross domestic product (GDP).
Local currency
The cedi’s year-to-date depreciation recorded 5 percent as at March this year while it depreciated by 7.5 percent against the Pound.
Commodities
At $2180.2/tonne in January this year, cocoa price fell to $2003/tonne as at February while gold price recorded $1233.8/ounce in February from $1192.8/ounce in January.
Crude oil was $55.5/barrel in January. As at yesterday, it was hovering around $50.88/barrel.
By Samuel Boadi