…The decision follows the 100-basis point cut implemented in January 2024, bringing the rate down from 30%.
MON, MAR 25 2024-theGBJournal| The Bank of Ghana (BoG) Monday kept its policy rate unchanged at 29% during its 117th Monetary Policy Comimittee (MPC) meeting, in line with market expectations.
The Committee adjusted the cash reserve Ratio (CRR) as follows-banks with loan to deposit ratio above 55% will have to meet a CRR of 15%;
-banks with loan to deposit ratio between 40% to 55% will have to meet CRR of 20%, while banks with loan to deposit ratios below 40% will be required to hold CRR of 25%
The BoG said these policy measures will come into effect in April 2024.
The decision follows the 100-basis point cut implemented in January 2024, bringing the rate down from 30%.
The central bank’s hawkish stance prioritizes further deceleration of inflation. This follows a modest decline in the February Consumer Price Index (CPI) from 23.5% to 23.2%.
The BoG said the decline was broad based, with food inflation down by 0.1 percentage point to 27.0%, while non-food inflation declined to 20.0%.
However, inflation remains significantly above the BoG’s target range of 13% to 17% for 2024. Ghana has continued to exhibit tentative progress in its battle against inflation.
”However, the country faces a long road ahead to achieve price stability,” analysts at Coronation Research said in a note to theG&BJournal.
Coronation Research notes that the ongoing fight against inflation coincides with Ghana’s struggle to restructure its massive external debt.
Meanwhile, following the International Monetary Fund’s (IMF) approval of a $3 billion bailout package, Ghana embarked on a comprehensive restructuring of its nearly $47 billion external debt to ensure long-term sustainability.
It’s crucial to remember that Ghana’s economic struggles began in December 2022 with a partial debt default on a significant portion of its $28.4 billion external debt.
The BoG’s decision to hold the policy rate reflects a cautious approach, prioritizing inflation control while acknowledging the ongoing debt restructuring efforts.
”The success of Ghana’s economic recovery hinges on its ability to achieve both price stability and sustainable debt management,” Coronation Research said.
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