Bank of Ghana keeps policy rate at 13.5%

The Bank of Ghana (BoG) has maintained its key policy rate at 13.5 per cent as a cautious measure against rising inflationary pressures.

The bank announced the decision Monday after a three-day meeting of the Monetary Policy Committee (MPC) ended Friday.

The Governor of BoG and Chairman of rhe committee, Dr Ernest Addison, said at a press conference that the bank was also ready to respond appropriately should risks to inflation materialise.

It is now the third time in a row that the central bank has left the benchmark rate unchanged. It was last reduced in May by 50 basis points.

"Inflation has risen sharply over the last two readings, driven mainly by sustained food price increases. Although food inflation has pushed overall inflation close to the upper limit of the band, core inflation remains relatively subdued."

"In the view of the committee, the increase in inflation is mainly due to food inflation, which is expected to abate with the onset of the harvest season. This notwithstanding, the latest forecast indicates that inflation will remain within the medium-term target band, but closer to the upper limit in the near-term, in the absence of further unexpected shocks."

"A close monitoring of the inflation situation is however warranted to respond swiftly to prevent potential second round effects on headline inflation from the rising food inflation. The committee stands ready to respond appropriately as needed if this particular risk materialises," Dr Addison said.

He also mentioned the lag in Fiscal consolidation, a burgeoning debt and sluggish recovery as some of the issues that were of concern to the committee.