MPC Maintains Policy Rate at 12.5 Percent

9/1/2011 3:51:12 PM

Rate decision goes contrary to analyst expectations. 

The Bank of Ghana left its prime rate unchanged at 12.50 percent after considering signs that the economy has picked up, the bank's governor said on Thursday, confounding most analysts' expectations of a 50 basis points cut.

The bank said after its monetary policy committee meeting in the West African nation's capital that it expected Ghana's inflation to remain in single digits until year-end.

"The pace of economic activity has picked up, consumer confidence has improved and expectations about macro economic conditions are positive," central bank governor Kwesi Amissah-Arthur told a news conference.

Amissah-Arthur said even though inflation expectations have stabilised on a single digit path, upside risks were emerging from increases in utility tariffs and wages, and other external pressures which could overheat the economy.

Inflation was running at 8.39 percent in July, the lowest year-on-year rate since 1992.

"The decision to keep rates on hold is encouraging, as it signals that the central bank is cognizant of the upside risks to inflation," said Lisa Lewin, analyst at Business Monitor International, adding that a rate cut would have risked over-stimulating the economy and adding to inflationary pressures.

Source: Thomson Reuters 

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