The Bank of Ghana

The Monetary Policy Committee has issued a notice of their next Policy rate meeting for Tuesday, 26th March with the accompanying press conference on Monday, 01 April 2019. 

In the last the meeting in January 2019, the MPC pushed down the policy rate by 100 basis points from 17% to 16%, a move which was contrary to expectations of analysts.  In the previous meeting, analysts expected that the rate should have been maintained due to the heat within the economy created largely by the depreciation of the US Dollar. 

In the upcoming meeting the least the MPC could do is to maintain the rate to reflect the state of the economy.   The Bank’s monetary policy objective is to ensure price stability – low inflation – and subject to that, to support the Government’s economic objectives including those for growth and employment. Price stability is defined by the government’s inflation target.

bank_of_ghana
Dr. Addison, BOG Governor

Inflation in Ghana though, does not necessarily depend on ‘too much money chasing goods’ as it is all known, but rather more on the dollarization of the economy and the apparent weak controls on trading and repatriation of the US Dollar.   So far it is the sharp decline of the Cedi to the Dollar which has become an albatross on the neck of the government and which ought to be addressed.  However as inflation has reached its single-digit 9%, it may be a motivation to maintain the policy rate at 16%.  

The policy rate is the rate at which the Central banks lend to the banks and forms the basis for pricing of money for both lending and interest returns purposes.