The Monetary Policy Committee of the Bank of Ghana has maintained the policy rate at 26 percent.
The decision was attributed to the stability in the currency and current inflationary trend.
This is the third time that the policy rate has been maintained since January this year. Announcing the new rate at a media briefing on Monday, the Governor of the Bank of Ghana, Dr. Abdul Nashir Issahaku said, “Our committee has decided to maintain the policy rate at 26 percent…whatever decision we take is to steer inflation towards our medium term target of 8 percent plus or minus 2.”
The Central bank has been missing its inflation target for some time now. The inflation rate for April was 18.7 percent down from the 19.2 percent recorded in March this year. This was attributed to a slowdown in non-food inflation supported by stability in the interest rates.
But the Governor is hopeful the central bank will be able to attain its inflation target of 8 percent plus or minus 2 by the end of 2017.
“Recent developments in prices remain in line with our own earlier forecast that inflation will peak the first quarter of 2016 and decline thereafter.
It is supported by a continuous policy tightness and stability in the local currency,” he stated. Dr. Issahaku added, “The latest forecast that we have reinforced since the earlier forecasts that inflation will gradually decline from the second quarter towards the target that we made in 2017 barring any unanticipated shocks, the target of eight plus or minus 2.”
Meanwhile the Bank of Ghana says it considers a hike in petroleum prices as a risk factor to attaining its inflation target.
According to the Bank, the rise in prices of petroleum products will affect inflation to cause it to increase. “There are however risks to the inflation. We believe in our model but there are some risks that may affect our model.
These include; unanticipated upward adjustments in utilities and petroleum products prices possible making rounds effect on such adjustments in prices…so barring any further adjustments in utilities and any disparities, we expect to be on course in relation to our focus.”