The Monetary Policy Committee of the Bank of Ghana (BoG) has maintained the policy rate at 16%. The bank left its key lending rate to commercial banks at 16 per cent.
Speaking at a press conference on Monday, Governor of Bank of Ghana Dr Ernest Addison said the decision was taken because threats to growth outlook and inflation have been slightly contained, despite some challenges.
This is the first time in this year that the Bank of Ghana has kept the rate after its first huge reduction for January this year.
Dr Addison said, “The Committee observed that there risks to the outlook which would have to be monitored very closely. Overcoming these risks would require vigilance and time-consistent policy actions. “
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He added, “For example, in the energy sector, large foreign exchange payment for excess capacity associated with the take or pay power-purchase agreements which have contributed to higher demand for foreign exchange will have to be managed urgently. Also, the vulnerability associated with high non-resident holding of domestic debt which possess a significant risk to the fiscal consolidation process, debt dynamics and the Bank of Ghana’s efforts at building reserve buffers should be addressed.â€
According to Dr Addison, “The Committee was of the view that the Monetary Committee’s stand is relatively tight and real interest rates in Ghana are comparatively high. The Committee will closely monitor developments in the coming months and would not hesitate to take immediate and decisive action including a tighter monetary policy stands should these risks materialized and threaten to dislodge the disinflation process.â€