The Monetary Policy Committee of the Bank of Ghana has maintained the Benchmark rate at 14.5 percent, citing the balance of risks to inflation and growth.
In a statement issued following its meeting, the Committee indicated an elevated risk to the inflation outlook in its forecast horizon, but relief measures on utility are likely to ease price pressures in the outlook.
“The Bank’s latest forecast points to elevated risks to the inflation outlook in the forecast horizon, underscored by the recent jump in headline inflation. However, on the downside, relief measures on water and electricity tariffs and declining crude oil prices are likely to ease price pressures in the outlook,” the Committee said in the statement.
The recent rise in inflation to 10.6 percent, is projected to peak in the second quarter and begin to return to the disinflation path in subsequent quarters with inflation settling within the medium-term target band by the end of the year.
The Committee also noted that, on the growth outlook, baseline projections show a sharp downturn in GDP growth with the economy operating below capacity in the medium-term.
After remaining flat at 7.8 percent for three consecutive readings (January-March 2020), headline inflation jumped up in April to 10.6 percent—outside the Bank’s inflation target band.
The sharp rise in inflation is attributed to increased demand for food items stemming from the two panic-buying episodes preceding the market fumigation exercises across the country and the partial lockdown in both Accra and Kumasi—the two largest cities. This led to exaggerated food prices in April.
Food and non-alcoholic beverages prices rose to 14.4 percent, significantly higher than the 8.4 percent recorded in March 2020. Non-food inflation increased to 7.7 percent in April 2020 from 7.5 percent in March 2020.