Ghana holds key rate a fourth time as economy picks up

Bloomberg | Ghana’s central bank kept its key interest rate at an 8-year low for a fourth straight meeting as inflation edged closer to target and the economy is rebounding faster than expected.

The monetary policy committee (MPC) kept the rate at 14.5 percent, Governor Ernest Addison told reporters Monday in the capital, Accra.

Key Insights

– This is the last MPC decision under the administration of President Nana Akufo-Addo, which has taken credit for lowering the benchmark from 25.5 percent when he took office in January 2017. Akufo-Addo appointed Addison as head of the central bank in March 2017.

– Ghana was one of the first countries in sub-Saharan Africa to lower interest rates to counter the virus shock and its economy has performed better than forecast even as the pandemic stalled activity and the oil price slumped. Indicators now show faster economic growth than earlier projected, Addison said.

– The economy will be a key issue in the December 7 election when Akufo-Addo takes on his predecessor John Dramani Mahama of the National Democratic Congress in a bid to renew his term for another 4 years.

– The inflation rate dropped for a third straight month in October to 10.1 percent, inching closer to the central bank’s target range of 6 percent to 10 percent. Price growth will return to the 8 percent center of the band by the second quarter of next year, Addison said.