The Bank of Ghana’s Monetary Policy Committee has opted to maintain the benchmark interest rate at 29 per cent, a strategic move aimed at tackling inflation uncertainties spurred by currency pressures, utility tariff adjustments, and rising fuel prices.
The move has been described by economic analysts as a cautious stance in managing the country’s economy in a challenging time.
In an interview with CNBC Africa, Karen Kwarteng, Head of Global Market Sales at Stanbic Bank Ghana, discussed the implications of the central bank holding the benchmark rate at 29%.
She noted that despite an earlier 100-basis point rate cut, the hold on the current rate is deemed necessary to help moderate inflation and support disinflation efforts in the latter half of the year.
The Bank of Ghana has set an inflation target of 13 to 17 per cent by the year’s end, aligning with the government’s goal of 15 per cent.
Karen Kwarteng also highlighted the promotion of robust fiscal consolidation as a complement to monetary policy.
She mentioned that “For fiscal consolidation, government must increase revenue generation and reduce expenditure to mitigate inflationary pressures.
"Key government initiatives such as the Ghana.gov platform and the Ghana Integrated Financial Management Information System are pivotal in these efforts.”
The Standard Bank Executive further expressed optimism about the appreciation of the local currency in the near term, attributing this to the restructuring of the €13.1 billion bonds and anticipated IMF disbursements in November.
She noted that “These factors are expected to provide much-needed support to the currency despite ongoing challenges such as declining cocoa earnings, which have hampered the regulator’s capacity to intervene in the forex market.”
In recent times, high lending rates, driven by elevated reference rates, have continued to pose challenges for businesses in Ghana seeking affordable credit.
Nevertheless, Karen Kwarteng commended the resilience of Ghana’s banking sector, which has shown stability following the domestic debt restructuring program.
She also acknowledged that “Support from regulatory and governmental bodies has been instrumental in this recovery, enabling banks to navigate the post-restructuring landscape effectively.”
As Ghana navigates the challenges of inflation management and strives for economic stability, the collaboration between monetary and fiscal authorities will be crucial.
The focus on fiscal consolidation, prudent financial management, and strategic monetary policy is aimed at addressing current economic challenges and paving the way for a more resilient and sustainable future for the country.
The Bank of Ghana’s decision to hold the benchmark rate at 29%, therefore, reflects a strategic approach to managing inflation and economic stability.
With continued efforts in fiscal consolidation and supportive monetary policies, the country will likely overcome current economic challenges and achieve sustainable growth.
The resilience of the banking sector and optimism about currency appreciation further contribute to a cautiously positive outlook for the country going forward.
Latest Stories
-
Ghana’s oil production may grind to a halt by 2024 – Dr. Manteaw
26 mins -
Today’s front pages: Friday, September 13, 2024
37 mins -
2025 AFCONQ: Possibility of playing abroad ‘a pity’ – Ghana coach Otto Addo
40 mins -
Black Stars forward Antoine Semenyo grabs Bournemouth’s Player of the Month
56 mins -
Oxmart Prah releases new single titled ‘Invitation’
3 hours -
Police minister’s purse stolen at police conference
3 hours -
SEC eyes timelines for crypto legislation amid rising public interest
3 hours -
SEC open to regulating crypto, but warns investors of current risks
4 hours -
CalBank to host 3rd B2B engagement for Ghanaian businesses in Turkey, offers Dubai leisure package
4 hours -
Deputy Lands Minister rejects calls for blanket ban on small-scale mining
5 hours -
Enimil Ashon: Threaten the ‘8’ and galamsey will stop
5 hours -
Boeing workers to strike as 25% pay rise rejected
5 hours -
Mpox deaths rise by 107 in a week as Africa CDC calls the toll unacceptable
5 hours -
More than 260 women sexually assaulted during Congo prison break, UN report shows
5 hours -
US supports two permanent UN Security Council seats for Africa
6 hours