BoG maintains policy rate at 30%
Dr Ernest Addison — BoG Governor

BoG maintains policy rate at 30%

The Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) has maintained the policy rate at 30 per cent.

This is subsequent to calls from economic experts and the business community for the central bank to stay the policy rate to prevent a further hike in interest rates in the country.

The Governor of BoG announced this today at the 114th MPC meeting in Accra.

Explaining why the policy was maintained, he said the committee noted the moderation in global economic activity, arising from the high inflation, tighter financing conditions, weak demand weighing down on manufacturing output, as well as the moderation in China’s recovery after the sharp rebound in the first quarter. 

He said the slowdown in global growth momentum is however concentrated in advanced economies with the Euro area a key downside risk, but emerging market and developing economies are expected to post some strong growth at 4.0 per cent in 2023. 

On the domestic front, he said the committee observed the overall improving macroeconomic conditions with relatively strong economic growth and a drop-in inflation in August. 

These developments, he said, provide evidence that the policy mix under the three-year International Monetary Fund (IMF) Extended Credit Facility is beginning to yield results.

“Economic activity is rebounding strongly, the exchange rate is stabilising, inflation is declining, and level of foreign exchange reserves has improved. 

Sustained improvement in these indicators should result in the restoration of real incomes and purchasing power,” he said.

According to the Governor, the strong growth outturn observed in the first half of 2023 is expected to continue in the third quarter as indicated by the July 2023 update of the Bank’s Composite Index of Economic Activity (CIEA). 

Also, Ghana’s Purchasing Managers’ Index (PMI) lends support to the growth outlook, reflecting improving business six conditions. 

“The results from the confidence surveys so far also indicate continued improvement in business and consumer sentiments influenced by the relative stability in the Ghana cedi, and more recently the resumption of the disinflation process. The pick-up in confidence is expected to continue for the rest of the year in line with improving macroeconomic conditions,” Dr Addison said.

Fiscal policy

On the implementation of fiscal policy, he said while policies remain consistent with the IMF supported programme thus far, challenges associated with revenue mobilization persist and will require additional efforts to safeguard the revenue-led fiscal adjustment programme. 

The country’s external sector position has continued to improve significantly in the first eight months of the year, supported by a current account surplus, reflecting higher gold export receipts, import compression, and lower outflows from the services and income accounts. 

“The lower balance of payments deficit, the domestic gold purchase programme, as well as inflows from the mining sector and the liquidation of some short-term external liabilities contributed to rebuilding the country’s reserve buffers. 

In the last quarter of the year, reserve accumulation would be further bolstered by the expected inflows from the cocoa syndication loan, the second tranche of the IMF ECF programme, and other multilateral inflows,” he said. 


On inflation dynamics, he said the continued maintenance of a tight monetary policy stance and relative exchange rate stability have contributed significantly to the disinflation process observed in the year thus far. 

Dr Addison indicated that headline inflation has declined by a cumulative 14.0 per cent since the peak of 54.1 per cent recorded in December 2022. 

“All core inflation measures, monitored by the central bank are trending downwards, indicating continued easing of underlying inflationary pressures. In addition, one-year ahead survey-based inflation expectations seem well anchored. 

While the disinflation process has resumed, which should result in a gradual return towards the target band over the medium-term barring unanticipated shocks, rising international crude oil prices and adjustments to utility tariffs remain a risk to the inflation outlook which would have to be managed through monetary policy vigilance,” he added.

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