Ghana’s central bank held its main policy rate unchanged on Monday at 25.5 percent, in part because the government did not meet economic targets it had set for the end of 2016, Governor Abdul-Nashiru Issahaku said
As a result of the slippage, the central bank expects the government to hit its medium term target for inflation reduction in 2018 rather than in late 2017, he told a news conference at the end of a monetary policy committee meeting.
“There are concerns regarding the inflation outlook, which could be impacted by the pass-through effects of the recent exchange rate volatility, persistent increases in food inflation and the fiscal outturn,” he said.
“There is therefore the need to return to the path of fiscal consolidation to complement the tight monetary policy stance to deliver on the medium term inflation target,” Issahaku said in the first detailed comments on Ghana’s economic health since President Nana Akufo-Addo took power on Jan. 7.
Ghana had one of Africa’s most dynamic economies until 2014, based on its exports of gold, oil and cocoa, and the new government has promised to restore fiscal stability and enable double-digit GDP growth.
The Bank of Ghana trimmed the interest rate in November by 50 basis points in the first such cut since July 2011, which may herald further reductions this year as inflation begins to fall at a faster pace after years above government targets.