Ghana Cedis
Ghana Cedis

ACCRA, Feb. 13 (Xinhua) — The Monetary Policy Committee (MPC) of the Bank of Ghana announced here Wednesday its decision to maintain its existing 15 percent Policy Rate at the beginning of 2013.


According to Acting Governor of the Bank of Ghana, Henry Kofi AkpenaMawu Wampah, the decision was arrived at based on the fairly balanced outlook of growth and risks to inflation.


?The committee judged the risks to inflation and growth in its outlook as fairly balanced and therefore decided to maintain the policy rate at 15 percent,? Wampah announced.


He forecast inflation to remain broadly stable within a projected band of 9.0 percent + or ? 2 percent by the end of 2013, saying this target would be revised with the expected revision of the inflation basket by the country?s Statistical Bureau by early March.


Risks to inflation, according to Wampah, who is also chairman of the MPC, were the ongoing energy crisis, which could affect businesses, and the extent of fiscal consolidation.


Financial Services House, Morgan Stanley, had forecast a 100 basis point (bp) reduction in the policy rate as the local currency had stabilized amidst a stable Foreign Exchange (FX) Market.


It believed enough stability had been achieved since the ?Bank of Ghana implemented a raft of macro-prudential measures last year.


It also said ?the presently benign inflation environment should, together with a stable FX, give the MPC enough comfort to partly unwind the 150bp of rate hikes implemented in 2012 to help arrest cedi weakness?.


The January figures released by the Ghana Statistical Service had pegged inflation at the December figure of 8.8 percent.


However,?Wampah explained that the possible removal of subsidies from utility tariffs could be a source of risk to macro-stability, in addition to management of the 2013 wage negotiations and balance of payments risks.


The positive outlooks on growth, the governor said, were underpinned by private sector credit expansion, improved business and?consumer sentiments, growth in the?Composite Index of?Economic?Activity (CIEA),?and increased oil production?in the last quarter of 2012.


Oil for the first time outstripped cocoa as the second largest foreign exchange earner for the country, Wampah disclosed.


He said while oil raked in 3.0 billion dollars, cocoa, which for a long time had remained Ghana?s largest foreign exchange earner, dropped to third place, with about 2.7 billion dollars, with the government earning about 540 million dollars from its share of oil exports.


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