The Monetary Policy Committee of the Bank of Ghana (BoG) has maintained the policy rate at 14.5 percent, citing the upside risks to inflation and growth of the economy.
The policy rate has been maintained at 14.5 percent since March 2020, when the country recorded the first positive case coronavirus.
Governor of the Bank, Dr. Ernest Addison during the announcement of the policy decision said risks to inflation in the near-term are being contained, but short to medium-term risks emanating from the fiscal expansion and rising crude oil prices are emerging.
Headline inflation, while on steady decline in the early months of the last quarter of 2020, jumped in December to 10.4 percent, outside the target band of 8±2 percent, driven by food prices.
This notwithstanding, the Bank projects headline inflation to return to target in the second quarter of 2021.
The Governor noted that the anticipated sharp fiscal correction this year stands currently unlikely amidst the second wave of the pandemic which requires additional spending.
“The prospects of a sharp fiscal correction in 2021 now looks unlikely amidst the second wave of the pandemic which will be requiring additional spending to provide testing, vaccines,” Dr. Addison said.
“To put debt on a sustainable path and to ensure sustainability in policies, some new revenue measures and expenditure rationalization efforts will have to be pursued within the context of the medium-term fiscal framework to allow for the generation of primary surpluses,” he added.
Source: Business 24, https://business24.com.gh/2021/02/01/policy-rate-maintained-at-14-5-2/