The Monetary Policy Committee (MPC) raised the Policy Rate to 24.5 percent from 22 percent previously.
Dr Ernest Addison, Governor of the Bank of Ghana (BoG), announced this at the 108th MPC press conference in Accra on Thursday, October 6.
While expenditures have been broadly on target, revenue performance has been below expectations, complicating fiscal policy implementation, according to the governor.
So far, the banking sector has financed the budget primarily, with the central bank taking a larger share.
Uncovered auctions and portfolio reversals by non-resident investors continue to pose risks to budget financing, resulting in the central bank monetizing the budget deficit.
The Monetary Policy Committee recognizes that the current situation is suboptimal and will be temporary until an agreement on an IMF-supported program is reached.
The Committee believes that the IMF engagement has been positive and early.
The completion of the program discussions will aid in re-anchoring stability.
“The outlook for the Ghana Cedi has improved, aided by the recent disbursement of
the loan from Afreximbank of US$750 million, the signing of the syndicated Cocoa
Loan of US$1.13 million, and the agreement with gold and oil companies to purchase
the repatriated foreign exchange earnings of about US$83.9 million so far, will help
stabilise the exchange rate,” he stated.
According to him, inflation remains high, and the risk-reward balance is tilted to the upside.
Although monthly inflation is expected to continue to slow, the risks are on the upside, owing to the pass-through effects of currency depreciation, the recent upward adjustment in utility tariffs, and rising inflation expectations.
The Committee remains committed to re-anchoring inflation expectations and returning to a disinflation path.
“Under the circumstances, the MPC decided to increase the Monetary Policy Rate by 250 basis points to 24.5 percent,” he added.
By: Rainbowradioonline.com/Ghana
