Monetary policy rate likely to go up

The Monetary Policy Committee (MPC) will this week review 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 combating inflation, determining day-to-day liquidity operations, and for determining other market rates such Treasury Bills.

Already Policy Analysts are projecting an increase of 100 basis points of the policy rate to settle at 17 percent from the current 16 percent. If this happens, it means universal banks in the country will have to respond by reviewing their various base lending rates upwards for the next couple of months.

Ghana’s inflation rate rose to 11.4 per cent last June compared with 11.1 per cent in May. The rate was calculated for the second consecutive month, using the new food basket of 267 items, and the monthly change rate for June was 2.6 per cent. The inflation was up to 6.3 per cent in June, from 5.8 per cent in May while the non-food inflation was unchanged at 15.7 per cent. Housing, water, electricity, gas and other utilities recorded inflation of 17.4 per cent, clothing and footwear 17 per cent while the communications sub-group had the lowest inflation rate of 0.9 per cent.

The BoG Governor, Dr Henry Kofi Wampah, who currently doubles as the chairman of the MPC, will address the press and also respond to critical questions from the media.

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.