19th May 2024

Dr Ernest Addison, Bank of Ghana governor

The Monetary Policy Committee (MPC) of the Bank of Ghana has kept the policy rate unchanged at 16 per cent for the sixth time since 2019.

Speaking at a news conference in Accra on Friday, the governor of the central bank, Dr Ernest Addison, said the decision was as a result of some threats to the country’s economic growth and inflation outlook.

He said the current appreciation of the cedi in the first month of this year had to do with some monetary intervention by the Bank which improved supply of dollars in the economy.

“The key risks to the global growth outlook are geopolitical tensions between the US and Iran and worsening of relations between the US and its trading partners, with the rising threat of protectionism and vulnerabilities in emerging markets,” he said.

“The outbreak of the Coronavirus poses a new risk to the global economy and its impact is yet to be assessed. The Brexit finally takes effect today (last Friday) and is not expected to adversely affect the global economic outlook,” he added.

Cedi’s depreciation

According to Dr. Addison, “the Ghana cedi depreciated by 12.9 per cent against the US dollar in 2019, compared with 8.4 per cent depreciation in 2018. Against the British pound and Euro, the Ghana cedi cumulatively depreciated by 15.7 and 11.2 per cent, respectively, compared with 3.3 and 3.9 per cent over the same period in 2018.”

By January 29 2020, the Ghana cedi had recovered, appreciating by 0.3 per cent, compared with a depreciation of 2.5 per cent in the same period of 2019.


On the domestic front, headline inflation has remained in single digits since June 2018 and more recently remained steady around the central path of 8.0 per cent.

The two readings since the last MPC meeting showed that inflation increased to 8.2 percent in November, from 7.7 per cent in October 2019, due to upward adjustment in some administrative prices.

However, it declined to 7.9 per cent in December 2019 on the back of lower food prices amidst stable non-food prices. Alongside these trends, the various measures of underlying inflation remained well-contained and the Bank’s core inflation (defined to exclude energy and utility) has declined since June 2019, supported by well-anchored inflation expectations.

Growth in the key monetary aggregates firmed up in 2019, driven largely by increased accumulation of net foreign assets by the Bank of Ghana. Broad money supply (M2+) recorded an annual growth of 21.6 percent in December 3 2019 compared with 15.4 percent a year ago. The increase was mainly reflected in increased deposits, signifying deposit flight to quality, as the clean-up process boosted a return to confidence in the banking sector.

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