BoG Policy Rate Unchanged At 16%

The Bank of Ghana (BoG) has kept the Monetary Policy rate unchanged at 16 percent.

Governor of the 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 of Ghana.

The policy rate represents the rate at which the BoG lends to commercial banks.

In April the Bank also maintained the 16 percent rate. That was the first time the BoG maintained the rate for 2019 after it was reduced in January of the same year by 100 basis point 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 was 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 the Committee observed that global growth has moderated with downward revisions for both advanced and emerging market economies.

The Governor indicated that the slower pace of growth was expected to continue over the first half of 2019 underpinned by escalating trade and geo-political tensions.

On the domestic front, according to Dr. Addison, economic growth remained steady and was projected to gain some additional momentum over the horizon, supported by crude oil production.

He noted that “early indications already show that economic activity in the first quarter is picking up pace ad 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 Committee noted that 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.

According to him, expenditure pressures have been exacerbated by payments associated with the energy sector.

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.”