Ghana's Issahaku Faces Inflation and Currency Woes in New Postby and
Inflation surged to highest in at least five years in January
Cedi weakened 16% against dollar since start of 2015
Ghana’s new central bank governor, Abdul Nashiru Issahaku, faces stubbornly high inflation and the threat of further currency weakness as he takes over the reins of monetary policy in the west African oil producer.
President John Dramani Mahama appointed Issahaku, formerly the Bank of Ghana’s second deputy governor, on Monday after Kofi Wampah retired on March 31. In his new position Issahaku will have to fight an inflation rate that surged to 19 percent in January, the highest in at least five years.
“The big challenge he faces, is inflation,” John Ashbourne, an economist at Capital Economics Ltd. in London, said by phone on Tuesday. “The other one would be the currency. It’s been more stable recently, so making sure we’re doing everything possible to keep the currency from falling off again.”
The Bank of Ghana has increased its benchmark rate by four percentage points since July to help restrain price growth and stem losses in the cedi. The has weakened 16 percent against the dollar since the start of last year with the economy growing at its slowest pace in two decades. Government income in the world’s second-largest cocoa producer was hit by global slump in crude prices, while rising public spending has prompted credit downgrades.
Issahaku joined the central bank in 2013 and is a former head of Ghana’s Export Development and Agricultural Investment Development Fund. His first Monetary Policy Committee statement on May 16 will give markets an indication of whether he will take a tough stance on inflation-targeting, according to Sampson Akligoh, managing director at Accra-based InvestCorp Ltd.
“The market is now trying to get to know him,” Akligoh said by phone on Tuesday. “His first monetary policy decision will be sufficient to get some understanding on policy orientation and the impact it’s going to have on the market.”
Wampah retired four months before his term was set to end, saying he wants to give his successor room to settle in before presidential and parliamentary elections that will take place as early as Nov. 7. Millison Narh is the central bank’s first deputy governor. Mahama’s office hasn’t made any announcement on Narh’s future or a replacement for Issahaku’s now vacant position.
The cedi gained 0.1 percent to 3.8360 per dollar as of 1:03 p.m. in the capital, Accra.