Ghana’s Issahaku Maintains Rate as Inflation Burden Eases

Updated on
  • Bank of Ghana keeps rate at 26% as cedi holds against dollar
  • Central bank to continue inflation-curbing stance, IMF says

Ghana’s central bank kept its benchmark interest rate unchanged for a third straight meeting as the cedi stabilized and inflation eased.

The Bank of Ghana held the rate at 26 percent, Governor Abdul Nashiru Issahaku, who chaired the first meeting since replacing Kofi Wampah last month, told reporters in Accra, the capital. The decision was in line with the forecast of all eight economists in a Bloomberg survey.

“The committee views the risks to inflation and growth as balanced,” Issahaku said on Monday. The monetary policy committee sees “the current monetary policy stance as appropriate since inflation levels remain above the medium-term target band.”

The MPC is ready to “take further policy actions, if necessary,” he said.

The cedi is down 1.5 percent against the dollar since January, after dropping 14 percent last year. A weaker currency has been a contributor to inflation, which slowed to 18.7 percent in April compared with a record 19.2 percent the month before.

“There will be moves toward loosening monetary policy over the course of this year but they are sort of doing that in a gradual way,” John Ashbourne, an Africa economist at Capital Economics Ltd. in London, said by phone. Capital Economics expects the rate will be lowered to 24 percent by the end of this year, he said.

IMF Program

The West African nation, which agreed to an International Monetary Fund credit program last April, met most of the end-December targets set under the scheme, the Washington-based lender’s mission to Ghana said May 11. The government of President John Dramani Mahama opted for the almost $1 billion program to help finance chronically large budget deficits and limit declines in the currency.

Ghana’s economy will probably expand 4.5 percent this year, according to the
IMF, after growing 3.9 percent in 2015, the slowest pace in two decades.

The Bank of Ghana is expected to maintain a policy stance “that will bring down inflation,” Joel Toujas-Bernate, head of the IMF’s mission to Ghana, said in an interview last week.

The cedi gained 1.1 percent to 3.82 per dollar as of 3:05 p.m. in Accra.