THE BANK of Ghana (BoG) has stated that to ensure the inflation target horizon is maintained and the medium term inflation target ±2% is achieved this year, the monetary policy rate of 20% has been left unchanged.
Dr Ernest Addison, Governor of BoG, briefing the press, in Accra yesterday, explained that while there was a trend decline in headline and core inflation throughout the year, allowing for some 550 basis points policy rate cut, the committee observed some emerging pressures in underlying inflation in the last two months of 2017, although inflation expectations appeared to be well anchored.
“On the domestic front, there was trend decline in prices during 2017, with inflation dropping from 15.4% in December 2016 to 11.8% in December 2017. However, since the last Monetary Policy Committee meeting, headline inflation has recorded two marginal upticks, mainly reflecting price pressures from domestic food and rising international crude oil prices which translated directly into ex-pump prices,” he said.
The Governor also highlighted the fact that domestically, economic activity has been fairly robust and the momentum is expected to be sustained over the medium term, supported by continued favourable external financing conditions.
The Governor said “the balance of payments has performed strongly, with a trade surplus and favourable outturn in the current account, and a higher than programmed reserve build-up providing enough buffer against potential external vulnerabilities.
“Clearly, these developments are reflecting in increased confidence at home and also abroad with our external partners evident in the tightening of interest rate spreads on Ghana’s sovereign bond instruments on international capital markets.”
Dr Addison said that the committee noted the increased pace of global growth, which is expected to continue in 2018, and the relatively subdued global inflation, supporting broad-based accommodative monetary policy stance across the major advanced economies.
He added that that had had a moderating effect on global financing conditions with positive implications for emerging and frontier markets, including Ghana.
The Governor pointed out that Gross Domestic Product (GDP) growth momentum was maintained throughout 2017.
According to him, provisional GDP estimates from the Ghana Statistical Service indicated that the economy grew by 9.3% in the third quarter, up from 9.3% in the third quarter, up from 9.0% and 6.6% in the second and first quarters of the year respectively.
He said “the non-oil GDP, which was slow in the first half of the year, picked up in the third quarter, recording a 5.9% growth, compared with 4.0% and 3.9% in the second and first quarters of 2017.”