The Bank of Ghana has reaffirmed its policy stance by increasing the Monetary Policy Rate to 29.5 percent, by 150 basis points(bps), citing the need to anchor inflation expectations towards the medium-term target of 8±2 percent.
Cumulatively, the MPC has hiked the policy rate by 1500bps on concerns to moderate liquidity in the system in order to underpin macroeconomic adjustments taking place to drive inflation on a downward path.
This move by the MPC is an indication that the Committee will remain resolute in its tightening stance until inflation shows more significant signs of moderation, as it implements other available monetary tools to control the money supply and rein in inflation, despite the recent moderation of inflation.
In a press briefing following the meeting of the Monetary Policy Committee, Bank of Ghana Governor, Dr. Ernest Addison, discussed the various factors contributing to the decision.
Dr. Addison noted that headline inflation had declined marginally for two consecutive months but remained relatively high compared to the medium-term target of 8±2 percent. As such, a further tuning of the monetary policy stance was necessary to reinforce the pace of disinflation and place the economy firmly on the path of stability.
“To place the economy firmly on the path of stability and reinforce the pace of disinflation, it is important that the monetary policy stance be tuned further to re-anchor inflation expectations towards the medium-term target. Given these considerations, the MPC decided to increase the Monetary Policy Rate by 150 basis points to 29.5 percent,” he said.