Addressing the media on Monday, July 25, 2022, after the Monetary Policy Meeting, the Governor, Ernest Addison disclosed that one of the reasons for maintaining the rate among other things has to do with how inflation has persisted on an elevated path.
“A detailed review of the consumer basket shows that although initially driven by supply side shocks, the initial relative price changes have broadened to almost all the items in the consumer basket.
“Over 80 percent of the items in the basket recorded inflation above 20 percent. Inflation perceptions and expectations, as revealed in the Bank’s surveys of consumers and businesses, have increased, and influenced agitations for Cost-of-Living Allowances in workplaces,” he disclosed.
He said the Bank of Ghana has responded decisively with its policy tools over the last few months increasing the policy rate by a cumulative 550 basis points since November 2021 and tightened liquidity conditions.
“The Committee also noted the deceleration in the rate of increase in inflation in the last reading. The Committee expects that the macroeconomic framework that will underpin an agreed IMF supported programme will present a stronger coordinated monetary and fiscal policy framework that will anchor stability and prevent a wage-price spiral, which will lead to inflation becoming more entrenched.
“Based on the above assessments, the Committee was of the view that it will be appropriate to pause and observe the impact of the recent monetary policy measures already taken. The Committee therefore decided to maintain the monetary policy rate at 19.0 percent.”