Bank of Ghana raises policy rate to 16% in May 2013
The Bank of Ghana has increased the policy rate by 100 basis points to 16% from 15%.
The central bank told journalists in Accra today May 22, 2013, after its 55th Monetary Policy Committee (MPC) meeting that the factors that informed the decision to increase the basic interest rate were, lower commodity prices and slow activities in the domestic economy.
Other factors, according to the central bank were heightened exchange rate, a vulnerable global economy and noting of the fact that risk to inflation has leveraged.
Meanwhile, the Standard Chartered Bank predicted last week that the Bank of Ghana will increase the policy rate by 100 basis points (bps).
The said it saw a small chance that the Bank will increase its policy rate.
The Bank of Ghana maintained its policy rate at 15% at the beginning of 2013 because it said risks to inflation and growth in the outlook were fairly balanced.
According to Standard Chartered Bank Research the Ghana cedi (GHS), the national currency has been under increased pressure since mid-April, due largely to the drop in gold prices, Ghana’s main export, but also more recently due to deteriorating sentiment on the ground and the frontloading of US dollar demand.
“The BoG has linked GHS weakness to seasonal factors (we find little seasonality in GHS) but has said that it will act, which is consistent with our view that it wishes to ensure an orderly GHS market to keep the confidence of international investors, who finance Ghana’s persistent current account deficit,” it said.
“In our base case, the BoG acts this week to support the Ghanaian cedi, most likely through reserve requirement hikes and a reduction in banks’ net open foreign exchange positions. We also see a small chance of a 100bps hike in the prime rate,” Standard Chartered said.
By Emmanuel K. Dogbevi
DOMESTICALLY GHANA DOESN’T PRODUCE NOTHING, IMPORT EVERYTHING FROM RICE, CHICKEN, TOOTHPICKS, SO WHAT VIABLE IS THIS ECONOMY. PITY TO GHANAIANS, THIS ECONOMY IS NOT PRODUCING JOBS, DEPENDS HEAVILY ON RAW MATERIAL EXPORT,. AGAIN IMPORT MORE THAN IT EXPORT. THE ECONOMY IS BEING RUN DOWN. CORRUPTION IS AT THE HIGHEST PEAK.
The problem is not about corruption. Our universities in the country are not training people to be self-employed. Eg I had a degree in agriculture and I am working in the Ghana Commercial Bank. Who am I expecting to farm, monitor and innovate to come out with agricultural products? Ghana will continue to import rice, maize, tomatoes, fish, and chickens. We fail to change. We are exporting gold, salt, manganese, timber, and many others. These are natural resources. They are cooked already. They cannot be eaten. Therefore we import what we will eat. I must change and you must change and Ghana will stop importing.