BoG’s MPC reduces policy rate to 29%

The Monetary Policy Committee of the Bank of Ghana has reduced the policy rate by 100 basis points from 30% to 29%.

Speaking to the media on Monday, Governor of the Central Bank, Dr. Ernest Addison, said the downward review of the policy rate is against the background of a just-started recovery of the economy and the need to consolidate the recent gains experienced in inflation.

“The Committee noted the emerging recovery but sees the 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 percent.”

According to Governor Addison, monetary policy tightening in several important economies has paused in 2023 due to the easing of global inflation. Global growth has also remained relatively muted.

“Global economic activity moderated somewhat in the year. Declining energy and food prices, together with tight monetary policy, have exerted downward pressure on headline inflation. Although major central banks have paused their policy rate hikes due to declining inflation, global financing conditions remain tight as the past effects of restrictive policies continue to keep borrowing costs high.”

Dr. Addison noted further that banks liquidity and profitability have improved despite increasing credit risks. He urged the strengthening of the recapitalization efforts of banks in a quest to improve overall banking sector stability.

On foreign exchange reserves, the Central Bank Governor stated that there has been a general boost in the forex reserves of the country, citing the IMF bailout disbursements, cocoa syndicated loan receipts, and other interventions, including forex repatriation policies for mining and oil companies,  reduction in debt service payments, and the expected inflows from the World Bank Development Policy Operations.