BoG Reduces Policy Rate To 29%

After hanging at 30% for six consecutive months, the Bank of Ghana has reduced Monetary Policy Rate (MPR) by 100 basis points.

The Monetary Policy Committee (MPC) after their recent meeting reduced the rate to 29% in response to the current global and national economic trends.

The Committee premised the reduction on global economic growth, decline in inflation, stability in the banking industry and improvement in foreign reserves.

“The macroeconomic fundamentals have all trended in the right direction. Both headline and core inflation are declining and projected to decelerate further, inflation expectations seem well-anchored, fiscal policy implementation is broadly in line with expectations, the current account balance is in surplus and will likely remain so in the near term, foreign exchange reserve build-up has been strong and should support a stable exchange rate outlook.”

“Improved forex inflows from the IMF-ECF disbursements, receipt of the cocoa syndicated loan, and expected funding from the World Bank’s Development Policy Operations are expected to improve foreign exchange inflows. In addition, the gold for reserve programme of the Bank, repatriation of foreign exchange from the mining and oil companies, and reduction in debt service payments would further support reserve build-up and improve the external sector outlook.”

The Bank also forecasts that the disinflation process will continue, and headline inflation is expected to ease to around 13-17% by the end of 2024, before gradually trending back to within the medium-term target range of 6-10 per cent by 2025.

Announcing the new policy rate, the Central Bank asserted that there is a need to maintain a strong policy stance to consolidate the disinflation gains.

“Under these circumstances, the Committee decided to reduce the Monetary Policy Rate by 100 basis points to 29 per cent.”