The Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) has maintained the Monetary Policy Rate (MPR) at 19 per cent in spite of slow growth and rising inflation.
The Governor of the BoG, Dr Ernest Addison, told a news conference on Monday in Accra that the committee resolved to maintain the interest rate at 19 per cent in order to check rising inflation and observe the impact of the policy measures on growth concerns.
He explained that the inflationary trend was not peculiar to Ghana as headline inflation in several advanced and emerging market economies had drifted further above set targets, amid escalating energy and food prices, as well as persistent and broadened supply chain bottlenecks.
The report by the Ghanaian Times on Tuesday said that Dr Addison stated that global financing conditions had tightened further, reflecting monetary policy normalisation and expectations for further increases in policy rates, which had led to higher government bond yields, re-pricing of risky assets, and strengthening of the United States dollar.
The report added that the BoG governor stated that tighter global financing conditions was having financial impact on emerging and developing economies, including Ghana, as it made the cost of capital on the international market expensive and created reversal of capital flows.
According Dr Addison, economic activity in the local economy moderated in the first quarter and that the latest estimates from the Ghana Statistical Service showed moderation in Gross Domestic Growth to 3.3 percent for the first quarter of 2022, compared with 3.6 percent in the same period of 2021, and 7.0 percent in the fourth quarter of 2021.
He explained that the non-oil GDP growth was 3.7 percent, down from 5.3 percent recorded for the comparative period in 2021, indicating that deceleration in growth was driven by slower activity in the agriculture and services sectors.
On the inflationary trend in the country, Dr Addison said that Headline inflation increased markedly from 23.6 percent in April 2022 to 27.6 percent in May and then increased further up to 29.8 percent in June and food inflation went up from 26.6 percent in April to 30.1 percent in May, and then to 30.7 percent in June 2022 and non-food inflation moved from 21.3 percent to 25.7 percent, and then to 29.1 percent in June 2022.
According to Dr Addison, the month-on-month inflation has, however, slowed for the second consecutive time and that after increasing by 5.1 percent in April 2022, the monthly headline inflation slowed to 4.1 percent in May, and then to 3.0 percent in June.
It will be recalled that since November 2021 to May 2022, the MPC has increased the MPR, which is the rate the BoG borrows to the commercial banks, by 550 basis points in a bid to control inflation.
GIK/APA