Ghana Rates Seen Steady as Issahaku Holds First Meeting

  • Cedi stabilized, inflation started slowing since last meeting
  • Issahaku was appointed in April after Kofi Wampah retired

Ghana’s new central bank governor, Abdul Nashiru Issahaku, will probably keep policy unchanged at his debut interest-rate announcement after inflation started to slow and the cedi stabilized.

Issahaku, 54, appointed last month after the early retirement of Kofi Wampah in March, will probably leave the benchmark rate at 26 percent when he announces the first Monetary Policy Committee decision under his leadership on May 16, according to the median of eight economist estimates compiled by Bloomberg. While Wampah raised rates by a total of four percentage points from July to November, he didn’t adjust borrowing costs at his last two MPC meetings.

Stability in the cedi since the March MPC meeting has eased inflationary pressures, leaving room for Issahaku to hold the policy rate, according to Courage Kingsley Martey, an economist at Databank Group Ltd., Ghana’s biggest private fund manager. Price growth slowed to 18.7 percent in April, from a record 19.2 percent the previous month and the cedi, which lost 14 percent against the dollar in 2015, had weakened just 0.5 percent this year as of Thursday.

The currency weakened 0.4 percent to 3.8250 against the dollar by 3:05 p.m. in Accra, the capital, on Friday.

was little changed at 3.8250 against the dollar by 11:47 a.m. in Accra, the capital, on Friday.

Issahaku, a former deputy governor of the central bank, “is not new to the price stability framework that they’ve been operating for a while now,” Martey said by phone on May 11. “I’d expect him to continue that framework, which is if you feel threatened by inflation tighten, and vice versa. Even though inflation is elevated, the pressure is gradually diminishing on the back of a stable exchange rate.”

The government of President John Dramani Mahama opted for an almost $1 billion program with the International Monetary Fund last April to help finance chronically large budget deficits and limit declines in the currency. The west African country met most of the end-December targets set under the IMF program, Joel Toujas-Bernate, head of the Washington-based lenders’ mission to Ghana, said on May 11.

Ghana’s central bank is “expected to continue to maintain a policy stance that
will bring down inflation,” Toujas-Bernate said in an interview. “A new governor doesn’t change anything.”

IMF requirements would prevent Issahaku and the central bank from being influenced by political pressure to take popular decisions, even in an election year, Martey said. Ghanaians will go to the polls to elect a new president and lawmakers as early as November.

“The change in the governor will not affect anything at the central bank, especially because of the IMF program,” Michael Otu Fiaw, a research analyst at Accra-based NDK Asset Management Ltd., said by phone. “I expect the central bank and the governor to follow through with the IMF program despite election pressures.”

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