ACCRA (Reuters) -The Bank of Ghana held its main interest rate steady at 28.0% on Friday, maintaining its tight monetary policy as inflationary pressures continued to ease due to exchange rate stability and fiscal consolidation.
Most economists surveyed by Reuters had expected the central bank to leave the rate on hold after a surprise 100 basis points increase in its last monetary policy committee meeting in March.
Ghana’s consumer price inflation slowed for a fourth month in a row in April, to 21.2% year on year from 22.4% in March. It remains well above the Bank of Ghana’s target of 8% with a margin of error of 2 percentage points.
Governor Johnson Asiama said inflation was expected to ease faster towards the medium-term target in the first quarter of next year, as opposed to the second quarter as earlier envisaged, barring unanticipated shocks.
“Despite these positive developments, the committee observed that the current level of inflation remains high relative to the medium-term target and will require maintaining the tight stance to reinforce the disinflation process,” Asiama said.
He added that Ghana’s cedi currency had appreciated strongly against the major trading currencies, driven by a combination of factors including its tight monetary policy stance, ongoing fiscal consolidation, record reserve accumulation and strict enforcement of forex market rules.
The gold, oil, and cocoa-producing West African nation is recovering from its most severe economic crisis in decades, facing challenges in its critical cocoa and gold industries.
Finance Minister Cassiel Ato Forson said during his budget speech in March that steep spending cuts would allow Ghana to drive down inflation to 11.9% by the end of the year.
(Reporting by Emmanuel Bruce and Christian Akorlie; Writing by Anait Miridzhanian;Editing by Bate Felix and Conor Humphries)
