Dr. Ernest Addison
The Bank of Ghana (BoG) has kept the monetary policy rate at 16 percent.
Governor of BoG, Dr. Ernest Addison, announced this to journalists on Monday, May 27, 2019 in Accra.
He said the decision was taken at the 88th meeting of the Monetary Policy Committee (MPC) of the Central Bank.
The policy rate is the rate at which the BoG lends to commercial banks in the country.
In April, the BoG also maintained the policy rate at 16 percent.
That was the first time the BoG maintained the rate for 2019 after it reduced it in January by 100 basis points to 16 percent.
Giving reasons for maintaining the rate, the Governor explained that during the meeting, the committee observed strong external sector developments in the first quarter emanating from a strong trade surplus outturn and improved inflows into the capital and financial account.
In the outlook, he said the trade balance is expected to record surpluses bolstered by the oil sector and a pickup in private transfers to support an improving current account balance.
He added that global growth has moderated with downward revisions for both advanced and emerging market economies.
The governor indicated that the slow pace of growth is expected to continue over the first half of 2019 underpinned by escalating trade and geo-political tensions.
Touching on the domestic front, Dr. Addison said economic growth remained steady and is projected to gain some additional momentum over the horizon supported by crude oil production.
He said that “early indications already show that economic activity in the first quarter is picking up pace as evidenced by the Bank’s CIEA.
“Other factors such as improving business sentiments and credit growth are supportive of growth in the outlook.”
On fiscal developments, Dr. Addison said the implementation of the budget in the year 2019 showed continued challenges with revenue mobilization alongside increased pace of spending which poses some risks to the fiscal outlook.
He said expenditure pressures have been exacerbated by payments associated with the energy sector.
Dr. Addison indicated that development on the monetary market to the end of April 2019 generally reflected marginal downward changes in interest rates on government instruments between February and April 2019.
That, he said, reflected a shift to foreign financing of the budget after the Eurobond issuance, adding that “the 91-day Treasury bill rate has stabilized at 14.7 percent between February and April 2019, up from 13.3 percent in April 2018.”
According to the Governor, “The committee will continue to closely monitor both global and domestic developments and stands ready to take appropriate measures, if necessary, to maintain price stability.”
By Melvin Tarlue