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BoG maintains 16% policy rate

The Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) has retained its policy rate at 16 per cent.

The decision to keep the lending rate to commercial banks unchanged from the previous rate was taken after the committee “observed that there are risks to the outlook, which would have to be monitored very closely”.

Announcing the decision, the Governor of the BoG, Dr Ernest Addison said at a press conference on Monday, 1 April 2019 that: “Overcoming these risks would require vigilance and time-consistent policy actions”.

He pointed out that the “monetary policy has remained broadly accommodative in advanced economies. Concerns about weakening growth in the United States, and partially muted inflation pressures, have led to a revision to the Fed’s monetary policy forward guidance, signalling a pause in further interest rate hikes. As slower growth concerns mount, other central banks have held back on further tightening of their monetary policy stance. These developments may moderate the impact of the earlier tightening of financing conditions on emerging and frontier markets, especially in those with relatively strong macro fundamentals”.

Dr Addison said growth remains relatively strong and the negative output gap seems to be closing, although at a relatively modest pace.

“Overall GDP growth for 2018 is projected at 5.6 per cent, while non-oil GDP is projected to expand at 5.8 per cent. With an average growth of 6.1 per cent for the first three quarters of 2018, the broad expectation is that the annual target of 5.6 per cent will be realised. For 2019, GDP growth is projected at 7.6 per cent”.