Bank of Ghana leaves prime rate unchanged at 15 pct
Posted on: 12-Sep-2012
The rate-setting committee of the Bank of Ghana decided on Wednesday to keep its prime interest rate unchanged at 15 percent, acting bank Governor Henry Kofi Wampah told a news conference.
Analysts had expected the bank to hold the rate in order to consolidate liquidity draining moves and ward off inflationary pressures ahead of elections in December.
"The (Monetary Policy Committee) is of the view that the risks to inflation and the growth outlook are fairly balanced. Consequently, the committee has decided to leave the policy rate unchanged at 15 pct," Wampah said.
Ghana announced earlier on Wednesday that annual inflation was steady at 9.5 percent in August, the first time in six months the rate has not gone up.
"The rate decision was in line with our expectations, largely because of the stability of the currency experienced in recent weeks, and also because of recent developments on the pricing front," said Nii Ampa-Sowa of Databank Group.
"However, it remains to be seen, or at least articulated, how the (Bank Of Ghana) will deal with the expected decline of the currency, and possibly pricing pressures, as the election period draws closer in Q4-2012," he said
Wampah said the forthcoming food crop harvest season would have a moderating effect on inflation which would remain within the bank's target band for the year.
Record weakness in Ghana's cedi currency has fuelled price increases in the cocoa, oil and gold producing nation and led the Bank of Ghana to tighten monetary policy. It reintroduced short-term bills, changed bank reserve requirements, and required 100 percent cedi cover for vostro balances - held by local banks on behalf of foreign banks.
Wampah said a $1.5 billion cocoa loan signed by cocoa regulator Cocobod on Wednesday, will also provide additional inflows to support the cedi in the 3rd quarter. The currency had depreciated 18 percent through July.