The BOG however called for a return to path of fiscal consolidation to complement the tight monetary policy stance if the medium term inflation target of 8±2 per cent, is to be met. Headline inflation closed the year at 15.4 per cent, down from 15.8 per cent in October 2016, while underlying inflation pressures, measured by core inflation; Consumer Price Index excluding energy and utility price from 15.2 in November to 14.6 per cent in December, 2016.

“Inflation expectations by consumers and the financial sector eased in line with trends in headline inflation” he stated, adding that the developments in Headline Inflation were broadly in line with the Bank’s 2016 forecasts. Dr Issahaku noted that concerns still remained in the inflation outlook, including the pass-through effect of recent exchange rate volatility, persistent increases if food inflation and the fiscal out-turn.

He said the latest consumer survey conducted after the December polls, reflected optimism about economic prospects although economic activity had remained modest throughout 2016. Globally, while recovery continued to be moderate due to heightened policy uncertainties regarding BREXIT, commodity price volatility, rebalancing in China and the out-turn of the USA Elections.

He said the economic activity was projected to improve on the back of the pro-growth agenda of the new U S administration and some turnaround in commodity prices, especially crude oil. The MPC also revised the underlying assumptions in its forecasting framework to reflect recent upward adjustments in ex-pump prices, exchange rate depreciation and a higher than expected budgeted fiscal deficit out-turn in for 2016, thus shifting the baseline forecast horizon for the medium term inflation target into 2018.

“The committee viewed the risks to inflation and growth as balanced and decided to maintain the Monetary Policy Rate at 25.5 per cent. The Committee will continue to monitor development and take necessary action if required to achieve the medium term inflation target.