The central bank has maintained its monetary policy rate at 14.5 percent for January 2021.
This comes after the Monetary Policy Committee (MPC) of the Bank of Ghana held its first deliberations of the year from Tuesday, January 26, to Friday, January 29, 2021 to review economic developments of the country.
In a statement issued on Monday, February 1, 2021, Governor of the Central Bank, Dr Ernest Addison explained the decision was based on growth indicators rebounding and headline inflation returning to target in the second quarter of 2021.
“In the domestic economy, growth has picked up since the sharp contraction in the second quarter. All the high frequency indicators of economic activity have rebounded, consumer and business confidence levels are back at pre-lockdown levels, and there are indications of steady growth in private sector credit,” the Governor said.
“However, the Central Bank projects headline inflation to return to target in the second quarter of 2021. Risks to inflation in the near-term are broadly contained, but short to medium-term risks emanating from the fiscal expansion and rising crude oil prices are emerging. Under the circumstances, and given the balance of risks to inflation and growth, the Committee decided to keep the policy rate at 14.5 percent,” he added.
The BoG Governor however noted the threat of a renewed second wave of the coronavirus pandemic has heightened uncertainty and could hamper economic recovery process in the near term.
Meanwhile, at the MPC’s last meeting of 2020 in November, the central bank maintained its monetary policy rate unchanged at 14.5 percent for a fifth consecutive period for 2020.
The policy rate is of key interest to businesses operating in the country as it influences the interest rate on loans and determines the rate at which the central bank lends to commercial banks.