The policy rate is basically the rate which the BoG lends to the commercial banks in the country which influences the cost of capital.

Speaking at a news conference in Accra yesterday after the 118th regular meeting of the MPC, the Chairman and Governor of the BoG, Dr Addison, said global growth remained relatively strong, bolstered by an expansion of eco­nomic activity in large economies.

In spite of the strong glob­al growth, he said, the progress towards attaining inflation targets globally from the year-to-date had somewhat stalled as oil prices had risen due to escalating geopolitical tensions.

Dr Addison said for emerging markets and developing econo­mies, the strengthening of the US dollar and the tight monetary policy stance of the U.S. Fed had induced more headwinds to the disinflation process.

“Due to these developments,

 central banks have mostly been cau­tious to loosen their tight monetary policy stance. In the outlook, how­ever, central banks are expected to start the easing cycle when inflation begins to steadily decline towards targets,” he stated.

On the domestic economy, Dr Addison said the high frequency real sector indicators pointed to a sus­tained pick- up in economic activity through the first quarter of 2024.

He said the updated real Com­posite Index of Economic Activity recorded an annual growth of 2.1 per cent in March 2024, compared to a contraction of 6.4 per cent in

 the corresponding period of 2023, indicating that the pick-up in the in­dex was driven mainly by increased imports, private sector contributions to SSNIT, and tourist arrivals.

The Governor, however, said the latest confidence surveys conducted in April 2024 pointed to a softening of sentiments and both business and consumer confidence dipped.

He said the country’s disinflation process remained sluggish over the first quarter of the year as inflation, which declined to 23.1 per cent in December 2023, moved up to 25.8 per cent by the end of the first quar­ter of 2024, and currently at 25.0

 per cent on account of improve­ments in the supply of seasonal food crops which seem to have been countered by increasing non-food inflation from the exchange rate effects.

Dr Addison said the slowdown in the disinflation process was driven in large part by rising food inflation, mainly seasonal food crop items, and expressed the hope that inflation would trend down to between 13 and 17 per cent before the end of the year.

An Economist, Dr Adu Sarkodie, in an interview with the Ghanaian Times said the decision of the MPC to maintain the policy rate at 29 per cent was in the right direction.