ACCRA (BERNAMA): The Bank of Ghana raised its key Monetary Policy Rate by 200 basis points to 21 percent from the previous 19 per cent, said central bank’s Governor Dr Henry Kofi A Wampah.
He said that Monetary Policy Committee (MPC) had taken the move would ensure that the existing tight monetary policy stance was maintained while still operating within the corridor set by the Committee.
Dr Wampah said the increase in the rate was, however, not expected to affect the lending rates of banks or cost of doing business, explaining that the Committee just set the interest rate at 300 basis points around the monetary policy rate, which implied that the Reverse Repo rate would be maintained at the current 24 per cent and the Repo rate at 18 per cent.
The governor also said the Committee further took a decision on the reduction in the cash reserve requirement by 100 basis points to 10 per cent and indicated that further reduction might be considered by the Bank of Ghana when appropriate.
The Committee, he said, was concerned about the outward shift in the medium-term inflation path relative to the previous forecast, adding that the latest forecast indicated that inflation would continue to remain outside the target band.
However, he said, the inflation rate was expected to ease gradually towards the medium-term target band of 8.0 per cent plus or minus two percentage points in the first half of 2015.
He said the easing of inflation over the policy horizon was contingent on significant fiscal consolidation and maintenance of the tight monetary stance, in the absence of which the inflation target could take a longer duration, in excess of 12 quarters, to be achieved, considering the vulnerabilities in the economy.
