BoG maintains policy rate at 16% to achieve end-of-year inflation target

Cost of borrowing may not go down at least before the year ends as the Monetary Policy Committee (MPC) of the Bank of Ghana has maintained the policy rate at 16 percent.

This was announced after the final meeting of the committee for 2019.

The policy rate is the rate at which commercial banks borrow from the central bank

The policy rate has an effect on interest rates in the country.

Speaking at a press conference, the Chairman of the MPC and Governor of the Bank of Ghana, Dr. Ernest Addison explained that the decision was taken after the committee assessed the chances of achieving the inflation target for 2019.

According to Dr. Addison, “risks to the inflation outlook were broadly balanced, therefore the committee decided to maintain the policy rate at 16 percent while monitoring developments going forward”.

He noted that the economic indicators are exhibiting strong trends, supported by expectations of increased production in the mining sectors coupled with the implementation of growth-oriented government flagship Programmes.

Dr. Addison was hopeful inflation will remain within the target band over the forecast horizon, barring any unforeseen shocks.

“Inflation expectations, derived from the surveys, remain fairly anchored in single digits and core inflation,” he stressed.

Inflation target for 2019

For 2019, government is targeting an inflation rate of 8% plus or minus 2.

Meanwhile, headline inflation declined to 7.8 percent in August 2019, declined again to 7.6 percent in September, and has since inched up to 7.7 percent in October.

Source: Citifm