The Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) will hold its 107th Regular Meetings from Wednesday, July 20, 2022 to Friday, July 22, 2022 to review developments in the economy.

This will be the fourth time the MPC will meet this year. The upcoming meetings are expected to be concluded with a press conference on Monday, July 25, 2022 to announce the decision of the Committee.

The Central Bank of Ghana’s MPC meets every two months to review developments in the global and domestic economies and the committee’s decision after every meeting is based on the current economic conditions in the country and around the globe.

In its last meetings held in May this year, the Committee decided to raise the policy rate by 200 basis points to 19.0 percent after an assessment of developments within the global and domestic economies.

According to BoG, growth prospects in the domestic economy remain positive and the Bank’s high frequency indicators point to continued and increased momentum in economic activities with private sector credit showing some improvement in real terms, despite the increased price pressures.

After the Central Bank’s assessments, provisional GDP figures released by the Ghana Statistical Service (GSS) show that in the first quarter of 2022, growth was 3.3%, lower than 3.6% recorded in the corresponding quarter of 2021 as well as the 7.0% recorded in the last quarter of 2021.

This means growth momentum in the domestic economy slowed down considerably in the first three months of the year.

Robust Banking Sector

Regarding the Banking Sector, BoG noted that the sector remains robust, with sustained growth in total assets, investments and deposits. However, business and consumer confidence dipped, reflecting the sharp depreciation of the currency and the general high inflationary environment, which has resulted in higher input costs for businesses.

“A quick turnaround, with more confidence building measures to counter these conditions would provide further boost to the real economy”, the BoG noted.

In response to this call, government has decided to formally engage the International Monetary Fund (IMF) for support regarding its balance of payment challenges. The engagement between the government and the Fund is currently underway, and the Finance Minister, Ken Ofori-Atta, said the move will help boost investor confidence in the economy.

On fiscal policy implementation, the Committee observed that execution of the budget for the first quarter was broadly in line with targets although there was a minor deviation in the deficit target, stemming largely from low revenue receipts.

“It is the expectation of the Committee that fiscal consolidation will take hold gradually and the mid-year budget review will provide further fiscal fine-tuning to ensure that the fiscal consolidation efforts stay on track”.
Bank of Ghana

Recent global developments – COVID-19, Russia-Ukraine war, rising oil prices – are weighing heavily on the domestic economy which saw inflation rise to 27.6% in May 2022. Ghana’s exchange rate remains fragile, as the Ghana Cedi depreciated by 15.6% against the US dollar, 13.1% against the Pound Sterling, and 13.6% against the Euro in the first quarter of 2022.

The continuous rise in Inflation makes it very difficult for the central Bank to use its Inflation Targeting framework to tame it. Average lending rate stood at 21.61% as of April 2022 and with growth also slowing, it is very much likely that the BoG will maintain the policy rate for the next two months.