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BoG begins first 2025 Monetary Policy meeting to assess economic developments

 The Bank of Ghana’s Monetary Policy Committee (MPC) will commence its 122nd meeting today, January 22, 2024, to evaluate the state of the economy and introduce measures aimed at maintaining economic stability.

The three-day meeting, which marks the MPC’s first for the year, will culminate in a policy announcement on Monday, January 27, 2024.

The current policy rate stands at 27%, following a reduction in November 2024. The business community is optimistic about the possibility of another rate cut, citing persistent concerns about the disconnect between policy rate reductions and lower lending rates. High borrowing costs remain a significant hurdle for businesses, dampening investment and growth prospects.

Businesses are also closely monitoring potential measures to stabilize inflation and curb exchange rate volatility. Inflationary pressures have been a significant challenge, with the government missing its 2024 end-year inflation target of 15%. Inflation surged to 23.8% in December, driven by rising food prices and earlier currency depreciation.

At the previous MPC meeting in November 2024, the Governor of the Bank of Ghana, Dr. Ernest Addison, acknowledged these challenges, stating: “Inflation projections show a slightly elevated profile driven by high and unstable food prices, pass-through of previous exchange rate pressures, fuel prices, and utility tariff adjustments.”

The November rate cut was influenced by steep food price increases and a rapidly weakening cedi, which disrupted the disinflation process. Businesses now anticipate more decisive actions to tackle inflation and foster a stable economic environment.

As the MPC deliberates, the business community will be looking for clear signals of relief to support investment and economic recovery while addressing inflationary and exchange rate concerns.

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