Ghana Will Probably Leave Key Rate at 13.5 Percent After Inflation Slowed

Ghana’s central bank may leave its benchmark interest rate unchanged for the fourth consecutive meeting after the inflation rate pared increases made at the start of the year, a survey of economists showed.

The Accra-based Bank of Ghana will keep the lending rate at 13.5 percent, according to six of seven analysts surveyed by Bloomberg. One economist expected a half-point reduction. The decision will be announced at 11 a.m. tomorrow in the capital, Accra.

“I believe that inflation will continue to go down, particularly in the month of May,” Collins Appiah, head of asset management at Accra-based NDK Financial Services Ltd., said in an e-mailed note May 9.“With this expectation I will expect the MPC to continue to maintain the policy rate.”

Inflation slowed for a second consecutive month in April, dropping to 9 percent from 9.1 percent the month before, as the effects of a 30 percent increase in gasoline prices in January eased and the cedi stabilized. The currency which weakened as much as 5.7 percent in the first five weeks of 2011, is now only down 1.5 percent in the year.

The Bank of Ghana lowered its benchmark interest rate four times between November 2009 and July last year as inflation slowed from a five-year high of 20.7 percent in June 2009.

“As soon as inflation edges back into the double digits (probably not until the second half) we can expect a hiking cycle to commence,” Lisa Lewin, head of sub-Saharan Africa analysis at London-based Business Monitor International, said in an e-mailed note yesterday.

While the inflation rate will probably rise this year, it is unlikely to pass the level of the key interest rate, Yvonne Mhango, a sub-Saharan Africa economist at Renaissance Capital, said in an e-mailed note May 10.

“Given that credit growth is on a recovery path, the monetary policy committee may also not want to create a higher interest rate environment that will hinder this recovery,” she said.

To contact the reporter on this story: Moses Dzawu in Accra at mdzawu@bloomberg.net.

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net.

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