Ghana’s central bank plans to tighten monetary policy after inflation in West Africa’s second-largest economy quickened to the fastest pace this year, First Deputy Governor Millison Narh said.
“We will tighten monetary policy to check inflation,” Narh told reporters in the capital, Accra, yesterday. “We’re still in a tightening mode so far as monetary policy is concerned,”
The central bank held the benchmark interest rate at 16 percent in September to support the cedi and an economy limited by falling gold prices. The bank has raised borrowing costs 350 basis points, or 3.5 percentage points, to curb price increases since the end of 2011.
Inflation quickened to 11.9 percent in September from 11.5 percent in August, the highest this year, as the government removed subsidies for fuel and the cedi weakened to a record against the dollar boosting the prices of imports higher. Ghana imports most of the fuel it consumes. The cedi has dropped 13 percent against the dollar this year, the worst performing currency in Africa during that period.
The currency was unchanged at 2.19 per dollar at 9:12 a.m. in Accra.
Price increases will slow to within the bank’s target of 9 percent plus or minus 2 percentage points in the first half of next year, Bank of Ghana Governor Kofi Wampah said.
The central bank will not review its inflation target and the ratings downgrade by Fitch Ratings last week of Ghana’s sovereign debt “won’t change direction of monetary policy,” he said.