Bank of Ghana maintains policy rate at 29%

For the third consecutive time, the Bank of Ghana (BoG) has maintained the Monetary Policy Rate at 29 per cent.

The policy rate is a benchmark interest rate set by a Central Bank. It’s the rate at which commercial banks can borrow from the Central Bank.

This rate is used by the Central Bank as a monetary policy tool to influence short-term interest rates and control the money supply in the economy.

This implies that the reference rate for lending by commercial banks remains at 29 per cent.

On Friday, following the 119th meeting of the committee, BoG Governor, Dr Ernest Addison, announced the decision to maintain the rate.

He explained that despite most core inflation measures and inflation expectations trending downward, vigilance is necessary due to some uncertainty surrounding the macroeconomic indicators.

“”GDP growth outturn for the first quarter of 2024 was stronger than expected. Economic activity remained resilient in the context of a generally tight policy stance. This is shown by the latest GDP data released by the Ghana Statistical Service and the subsequent upward revision of growth estimates. Similarly, high-frequency indicators of economic activity, which are more recent, suggest stronger growth outcomes.

“Consumer and business confidence sentiments softened, driven by the rapid exchange rate depreciation observed in May and high food prices in June 2024. As the exchange rate stabilises and macroeconomic stability takes hold, the reversal of these sentiments will further help support economic activity.”

“Even though inflation is expected to remain within the target year path, the risks are tilted slightly on the upside. This will require maintaining a strong monetary policy stance supported by strong fiscal consolidation efforts, including remaining vigilant to ensure that the end-year inflation objectives are achieved.

“Given these considerations, the Committee decided to maintain the policy rate at 29 percent,” he stated.