by Justice Lee Adoboe
ACCRA, July 23 (Xinhua) -- The Bank of Ghana announced on Monday its decision to hold the benchmark policy rate at 17 percent.
This decision comes in the wake of rising headline inflation and currency depreciation.
Ernest Addison, governor of the central bank, said its Monetary Policy Committee stood ready to take the appropriate measures to promptly address any potential threats to the disinflation path.
"Given the circumstances, especially with regard to the global outlook, the committee decided to maintain the Monetary Policy Rate at 17.0 percent while closely monitoring developments in the near-term," the governor announced.
In assessing the balance of risks, the committee, according to Addison, was of the view that although inflation had moved upwards in recent readings, this came mainly from the effects of increases in administered prices of petroleum and transportation costs.
The second round effects from these price changes, he said, would not be significant enough to alter the inflation trajectory over the medium-term.
Headline inflation which has been falling since the beginning of last year increased to 9.8 percent in May and 10 percent in June while the local cedi currency, which had also been stable, depreciated cumulatively by about 6 percent over the past two months.
Overall growth in the Ghanaian economy is projected to remain high although private sector credit growth remained below expectations.
Addison observed however that there were emerging signs of recovery evidenced by increased new loan advances and easing credit stance on loans to households despite the on-going repair of banks' balance sheets.
These, together with positive sentiments by both consumers and businesses, he projected, should help spur growth over the medium term.
In his comment, Collins Appiah, Economic Advisor to Services Integrity Limited, a non-bank financial service, noted that the decision met general expectations.
"For me, it was highly expected because if you look at the fundamentals that we have at the moment, the Bank of Ghana, starting from this year, was having the willingness to have interest rates and all prices come down," the economist stated.
The Ghana cedi fell to an exchange rate of 4.81 to the U.S. dollar on Monday compared with the 4.78 cedis on Friday Enditem
