The Monetary Policy Committee (MPC) of the Bank of Ghana has maintained the policy rate at 29% for the second time this year following signs of disinflation which slowed in the first two months of the year. According to Governor of the Bank of Ghana and chairman of the MPC, Dr. Ernest Addison who announced the policy rate at a post-MPC meeting press conference on Monday, “although inflation rose slightly in January 2024 and edged down in February, the latest inflation forecast suggests a slightly elevated profile from the possible upward revision in transport fares, adjustment in utility tariffs, higher ex-pump prices and some pass through of exchange rate depreciation”. Overall, he continued, “risks to inflation are slightly on the upside and will require close monitoring.”
Presenting the domestic macroeconomic conditions while citing the central bank’s latest confidence surveys conducted in March 2024, Dr. Addison said that, business confidence sentiments improved as firms indicated meeting their short-term targets. The Consumer Confidence Index however remained broadly unchanged from the January survey as the PMI rose marginally above the 50.0 benchmark to 50.2 in February 2024, from 48.4 in January, he noted.
The 91-day and 182-day Treasury bill rates on the other hand declined to 27.87% and 30.34% in February 2024. from 35.67% and 35.73% respectively in the same period of 2023. The rate on the 364-day instrument decreased to 30.90% in February 2024 from 34.92% in February 2023. Also, in the first two months of 2024, total assets of the Banks increased by 21% while total deposits and advances rose by 25.5% and 1.8% respectively.
At the last MPC meeting which was the 116th held in January 2024, the Committee noted an emerging recovery in the economy but underscored the need to maintain a strong policy stance to consolidate the disinflation gains. That notwithstanding, the MPC at its 117th meeting decided to adjust the Cash Reserve Ration (CRR) for Banks that will become effective in April 2024. The new policy measures include the following;
- Banks with Loan to Deposit ratio above 55% will have to meet a CRR of 15%
- Banks with Loan to Deposit ratio between 40% to 55% will have to meet a CRR of 20%
- Banks with Loan to Deposit ratios below 40% will be required to hold a CRR of 25%.
The next MPC meeting is scheduled for May 22-24, 2024, with announcement of the policy decision on Monday, May 27, 2024.