Ghana’s Central Bank Holds Benchmark Rate as Inflation Burden Eases

ACCRA, Ghana, Capital Markets in Africa: Ghana’s central bank maintained its benchmark interest rate as the cedi stabilized and inflation eased.

The monetary policy committee of the Bank of Ghana held the rate at 26 percent, Governor Abdul Nashiru Issahaku, who chaired the meeting for the first time, told reporters in Accra, the capital, on Monday. This was in line with the forecast of all eight economists in a survey compiled by Bloomberg.  Former governor Kofi Wampah didn’t adjust borrowing costs at his last two MPC meetings.

“In assessing the current economic conditions, the committee views the risks to inflation and growth as balanced,” Issahaku said. The MPC “views the current monetary policy stance as appropriate since inflation levels remain above the medium-term target band.”

The cedi, which lost 14 percent against the dollar last year is only 1.5 percent down since January. Inflation declined to 18.7 percent in April from a record 19.2 percent the month before.

“The Committee remains committed to its price-stability mandate and will continue to monitor developments in the economy and take further policy actions, if necessary,” Issahaku said.

The West African nation, which agreed to an International Monetary Fund credit program last April, met most of the end-December targets set under the scheme, the Washington-based lender’s mission to Ghana said May 11. The government of President John Dramani Mahama opted for the almost $1 billion program to help finance chronically large budget deficits and limit declines in the currency.

The Bank of Ghana is “expected to continue to maintain policy stance that will bring down inflation,” Joel Toujas-Bernate, head of IMF’s mission to Ghana, said in an interview last week.