Governor of the Bank of Ghana (BoG) Dr Abdul Nasir Issahaku is expected to hold the Policy Rate of the Monetary Policy Committee (MPC) at 26 per cent as he makes his first announcement as governor on Monday, 16th May, 2016.
Dr Abdul Nasir Issahaku who was sworn in as new Governor of the central bank last month, following the early exit of his predecessor Dr Henry Kofi Wampah, is tipped to keep the rate at 26 percent following a slight decline in inflation in April.
The central bank whose core duty includes inflation targeting has been struggling to keep the figure down for close to four years now.
Inflation dropped to 18.7 percent in April after hitting 19.2 percent in March 2016.
Despite the decline in inflation some economists are predicting the figure will pick up in May,2016 when recent hikes in the prices of petroleum products reflect in inflation figures.
Though this is the first time Dr Issahku has chaired the Monterey policy committee of the central bank, it will not be his first time sitting in the meetings.
Prior to his elevation as the central bank governor he was a member of the committee.
He is expected not to depart from his predecessor’s policies especially as majority of them are guided by the IMF program.
Ghana signed onto the Extended Credit Facility program under the IMF in 2015.
The IMF program is expected to bring Ghana out of the woods by restoring debt sustainability and macroeconomic stability to foster a return to high growth and job creation, while protecting social spending.
Meanwhile economist Dr. Ebo Turckson, has called on the Monetary Policy Committee to reduce the monetary policy rate.
According to him, the current inflationary trends and a stable currency should be reasons for the MPC to reduce the policy rate.
Dr. Ebo Turckson who is also a Senior Lecturer at the University of Ghana said, “the currency has stabilized, inflation has toned down, so we should expect them to slightly reduce the rate. This is because of the fact that the rate itself when it’s changed, also fuels expectations on the interest rate.
“But even though when the rate changes sometimes we do not see a corresponding change in the lending rate immediately in this country, let’s see what the MPC will do this time. But we expect them to bring down the rate so as to bring down the lending rate which hovers around 30 to 40 percent.” Dr. Ebo Turckson noted.
Source: citibusiness