BoG increases policy rate to 28%

The Bank of Ghana has increased its policy rate by 28% to re-anchor the disinflation process.

“And so by majority decision the committee decided to raise the monetary policy rate by 100 basis point to 28% and this is meant to re-anchor the disinflation process. As inflation becomes family anchored…..The committee will re-access the scope for the gradual easing of the policy stance.”  The Bank of Ghana Governor, Dr. Johnson Asiama announced this at the first Monetary Policy Committee (MPC) press conference.

“Headline inflation has declined marginally, it remains a concern. Both food and non-food are significantly above expectation and core inflation remains inflated. While food inflation was driven largely by supply-side factors, preventing the second-round effects from such increases will be essential. The persistent inflation dynamics over the past year, partly driven by both fiscal and monetary policy missteps, will require a policy reset to re-anchor the disinflation process.” He explained.

Adding that “Now to restore price stability going forward will require a tight monetary policy stance, strong liquidity management, and commitment to the 2025 budget which seeks to reset the fiscal consolidation process. Now on the monetary policy decision, under the  circumstances, the committee by a majority decision…..For the first time we are using the majority decision unlike the unanimous decisions we have used for the past years since the flame work began.”

On additional operation measures, Dr. Johnson Asiama stated that “Now let me say a few words on additional operation measures. As usual, apart from the monetary policy decision itself…..So in addition to the adjustment in the policy rate, we are implementing some complementary measures which are meant to strengthen liquidity management and enhance monetary policy transmission.”

“First, we are introducing a longer dated 273-day instrument which is meant to augment the existing sterilization toolkit. Secondly, we plan to intensify the monitoring of banks’ Net Open Positions (NOPs) to ensure compliance. And the last one is to review the current structure of the Cash Reserve Ratio (CRR) to assess its broader impact on liquidity conditions and financial intermediation in the economy.” He added.

Source: Elvisanokyenews.net