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BoG maintains policy rate at 14.5%


The Central Bank has maintained its monetary policy rate of 14.5%.

This is the second time the regulator has maintained its lending rate to commercial banks in the country after its hike by 100 basis points in November last year.

The Central Bank, in a statement issued on Monday, January 31, 2022, the BoG attributed the maintenance of the policy rate to mainly the 20 percent cut in government expenditure which it expects to help moderate the upside risks to the inflation outlook.

The latest forecast shows that inflation would likely remain above target in the near-term, driven by both external and domestic factors, and only return to target in about four-quarters ahead. The key risks to the inflation outlook include: rising crude oil prices and its transmission to ex-pump petroleum prices and transportation costs, rising global inflation, food price uncertainties, and the fiscal outlook.

Read also: BoG introduces new guidelines for government securities market

The Monetary Policy Committee envisaged this scenario when it raised the policy rate in November 2021 to contain the inherent aggregate demand pressures likely to drive prices in the outlook. The Committee is of the view that the dynamics associated with the November 2021 policy rate hike are yet to be fully transmitted and expects the decisive implementation of the fiscal correction measures, especially the 20 percent cut in expenditure to help moderate the upside risks to the inflation outlook.

“The Committee will continue to monitor the impact of these policy measures and as needed call an extraordinary meeting to re-assess the inflation outlook over the forecast horizon and take the necessary policy decisions accordingly.

Under these circumstances, the Committee has decided to keep the policy rate unchanged at 14.5 percent,” remarked Governor of the Bank of Ghana, Dr, Ernest Addison.

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