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The Bank of Ghana (BOG) on Wednesday said despite the risk to high inflation it has decided to maintain the policy rate at 18 per cent. Dr Kofi Henry Wampah, BoG Governor, said the increase in the policy rate and the recent foreign exchange measures introduced in February had slowed down the pace of depreciation, stating that however, vulnerabilities still remain. He said the strict adherence to 2014 budgetary estimates is critical for macro-economic stability, explaining that reining-in the deficit should therefore be a priority. This, he said, would not only create space for development spending but also reduce borrowing and pressure on interest rates. Besides, it will also help boost international confidence in the economy, encourage capital inflows and facilitate donor disbursements. Dr Wampah, who is also the Chairman of BoG�s Monetary Policy Committee, made these known at the Committee�s media briefing in Accra. The Committee noted that disruptions in the energy sector and utility price shocks, as well as falling gold production and prices took their toll on growth in 2013. He said consequently, growth is expected to stay below par in 2014, reflecting the lingering energy sector challenges and other supply side shocks. The Committee was also concerned about the waning consumer and business sentiments as well as tightened credit conditions that could impact on the outlook. In assessing the outlook for inflation, the Committee noted that inflationary pressures had heightened, driven by periodic increases in fuel and utility prices, currency depreciation and supply-demand gaps in the general economy. The Bank�s latest forecasts show that inflation will only return to the target band of 9.5�2 per cent towards the end of the first half of 2015. �However, to address the liquidity overhang and improve supply of foreign exchange in the markets, the cash reserve requirement of banks has been revised upwards to 11 per cent from 9 per cent, while the Net Open Position (NOP) limits of Banks have been revised downwards,� he noted. The Governor said the single currency NOP had been reduced from 10 per cent to five per cent and the aggregate NOP had been reduced from 20 per cent to 10 per cent. He said the time frame for implementation would be communicated to the banks. According to him, global conditions are showing some marginal improvement, largely on account of developments in the advanced countries, led by the United States. He said consequently, the outlook for commodity prices suggested they could bring improvement in 2014 compared with 2013, which could impact positively on the external sector. Dr Wampah observed that on the other hand, prospects about a faster tapering by the US Fed coupled with evidence of a slowdown in China, as well as geo-political tensions arising from the political tensions in Ukraine could pose some challenges to the global economic outlook. He said: �The domestic economy will be impacted by these developments going forward. In particular, favourable commodity price developments in the international markets as well as higher inflows could impact external sector performance. "While gold and oil revenues may be flat, cocoa revenue is expected to improve.�