The Monetary Policy Committee (MPC) will this week commence the review of the health of the economy and announce a new Policy Rate for the next couple of months.

The Policy Rate is the rate at which banks borrow from the Central Bank as a last resort and also serves as a benchmark for the various banks in setting their respective base lending rates. The Policy Rate is also used for controlling inflation, determining day-to-day liquidity operations, and for determining other market rates such Treasury Bills.

Economic chieftains believe that the Central Bank will, for this time, slash the Policy Rate by at least 100 basis points to settle at 14 percent. If this happens, it means universal banks will have to respond to the new rate by cutting their various base lending rates for the next couple of months.

Ghana’s consumer inflation declined to 8.8 percent in December 2012, from 9.3 percent recorded in the previous month.

The monthly change rate for the month under review was 0.7 percent up, compared to the 0.5 percent recorded for November.

The food and non-alcoholic beverages group recorded an average annual inflation of 3.9 percent in December, with eight sub-groups recording inflation rates above the group average.

The non-food group recorded a year-on-year inflation rate of 11.6 percent, while transportation recorded the highest inflation rate of 20. 6 percent, the communications sub-group recording the lowest rate of 0.4 percent.

The Acting Governor of the Bank of Ghana, Dr Henry Kofi Wampah, who currently doubles as the Chairman of the MPC, will soon address the Press and respond to critical questions from the media, during the announcement of the new Policy Rate.

The major concerns will still be the key measures that will be put in place to arrest the cedi from falling further.

The presentation will cover the country’s fiscal deficit, trade balance, and the movement of interest rates among others.

The Bank of Ghana last increased the Policy Rate from 12.5 percent to 13.5 percent. This represents an increase of 100 basis points. The increase was as a result of some unforeseen factors likely to impact government’s projections and threats to inflation.

Specifically, the pace of executing the budget in terms of arrears clearance, including those relating to the migration to the Single Spine Salary Structure (SSSS), and the recently announced increase in the minimum wage impose additional demand pressures.

The cedi started to depreciate when foreign investors sought early redemption of their investments on the domestic bond market. The situation was further aggravated in January 2012 by speculative activities of dealers and traders on the Ghanaian bourse.