Ghana’s central bank left its benchmark interest rate unchanged for a second consecutive meeting to counter sluggish growth and a weaker cedi.
The policy rate was kept at 16 percent, Bank of Ghana Governor Kofi Wampah told reporters in the capital, Accra today. The decision was in line with the forecast of all six analysts surveyed by Bloomberg.
“The risk in the outlook for inflation and growth are balanced,” Wampah said. “Pressures in the foreign exchange market will ease further” by the end of the year, he said.
West Africa’s second-biggest economy is forecast by the government to grow by 8 percent this year from 7.9 percent in 2012. The economy shrank 3.1 percent in the first quarter from the previous three months as industry output contracted amid frequent power outages. Ghana, which cut fuel subsidies in February to help narrow the budget deficit, raised the gasoline price by 3.7 percent on Sept. 16.
Inflation slowed for the first time in seven months to 11.5 percent in August from 11.8 percent in July. The cedi has lost 13 percent of its value against the dollar this year, ranking it Africa’s worst performer after South Africa’s rand, according to data compiled by Bloomberg. Inflation risks remain to the upside, Wampah said.
The currency was unchanged at 2.18 per dollar at 12:14 p.m. in Accra.
“Recent cedi weakness does pose a risk to the inflation profile going forward,” Razia Khan, head of Africa economic research for Standard Chartered Plc in London, said in a note to clients after the decision. “Should the currency continue to come under pressure, more tightening may well be needed in this cycle.”