BY ANIN AGYEI-
NEW AFRICA BUSINESS NEWS, Accra, Ghana- THE BANK of Ghana (BoG) after its 91st Monetary Policy Meeting has decided to put its monetary policy rate at 16%.
This came to light on Monday, at the press briefing where the Governor of BoG, Dr. Ernest Addison, explained that the decision is due to risks to the inflation outlook which were broadly balanced.
Dr Addison said the latest forecast shows that 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 (excluding energy and utilities) is expected to remain at low levels,” he added.
The Governor said in the domestic economy, the indicators of economic activity are exhibiting strong trends.
According to him, the bank’s Composite Index of Economic Activity (CIEA) has shown steady growth alongside favorable business and consumer sentiments.
He said “Gross Domestic Product (GDP) growth is projected at 7.0% at year end, supported by expectations of increased production in the mining sectors, and the continued implementation of growth-oriented government flagship projects. Private sector growth is rebounding and will support growth in the outlook.”
Dr. Addison said the BoG is for a start, exploring a number of new prudential and market conduct regulatory measures to help foster more competition in the banking sector and in the process help lowering lending rate.
To further provide increased activity in the small and medium enterprise (SME) sector, the BoG is setting aside two percent of the bank’s primary reserve to support targeted lending to SMEs as part of the Enterprise Credit Scheme announced in the 2020 budget.
According to him, these funds will be held at BoG and will be available to banks that participate in the scheme.
The policy rate has been maintained to 16% since the beginning of the year.
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