By Maxwell Nkansah
The Monetary Policy Committee (MPC) of the Bank of Ghana has kept the policy rate at 13.5 per cent,
The Governor of the Bank of Ghana, Dr Ernest Addison said headline inflation has eased sharply and reverted within the medium-term target band, driven mainly by the tight monetary policy stance and some base drift effects.
The latest forecast remains broadly unchanged with inflation projected to remain within band and around the central path in the forecast horizon barring any upside risks from fiscal pressures.
On fiscal operations, the budget deficit exceeded its target in the first five months mainly on the back of revenue underperformance.
Going forward, he said expenditure has to be aligned to revenue performance to support the fiscal consolidation efforts.
At 76.6 percent of GDP in May 2021, the level of public debt raises debt sustainability concerns and the Committee reiterated the importance and urgency of fiscal consolidation efforts.
Greater efficiency in debt management would be required, especially in the face of potential further tightening of global financing conditions which could heighten rollover risks and access to new financing in the outlook.
This calls for strong vigilance and complementarity in fiscal and monetary policies to signal to the markets a strong commitment to consolidation.
“On the whole, the Committee assessed that the risks to inflation and growth were broadly balanced and decided to keep the policy rate at 13.5 percent,” he stated.