The Bank of Ghana on Monday announced the decision to keep its key lending rate at 30 percent after inflation trended down in August.
Ernest Addison, the Bank’s governor, made the announcement during a press briefing after the 114th Monetary Policy Committee meeting.
“The latest price reading in August 2023 indicated a fall in headline inflation, after consecutive upward trends since May 2023. Headline inflation dropped to 40.1 percent, from 43.1 percent in July and 42.5 percent in June 2023,” Addison stated.
He added that, “The decline in inflation was broad-based, with a stronger easing of food price pressures and the sustained easing of non-food price pressures observed in recent months.”
The governor said all the underlying inflation pressures also softened alongside the headline inflation in August, and “All the Bank’s core inflation measures trended downwards, with inflation excluding energy and utility prices, declining to 41.0 percent in August, from 44.2 percent in July.”
This outturn of inflation, Addison said was partly due to the strong policy stance and the impact of the International Monetary Fund (IMF)-backed economic reform programme.
While the resumption of the disinflation path triggers the hope of a gradual return towards the target band over the medium-term, Addison cautioned that rising international crude oil prices and adjustments to utility tariffs at home posed substantial risks to the inflation outlook and must be managed through monetary policy vigilance.
Given these apprehensions, he said the committee stands ready to respond appropriately should inflation deviate from the broad expectations.
Ghana, Africa’s largest gold producer, second largest cocoa producer in the world, and a fossils fuel exporter, has been battling its worst economic crisis in a generation due to spiralling public debt, ballooning inflation and exchange rate depreciation.