The central bank said in a Monetary Policy Committee (MPC) press statement that although underlying inflationary pressures had heightened, it expected the decisive implementation of the fiscal correction measures, especially the 20 percent cut in expenditure to help moderate the upside risks to the inflation outlook.

As a result, the committee said it had decided to hold the rate at 14.5 per cent while continuing to monitor the impact of these policy measures on price pressures.

It, however, stressed that it would not hesitate to call an extraordinary meeting to re-assess the inflation outlook over the forecast horizon and take the necessary policy decisions accordingly when needed.

The statement was issued by the Chairman of the MPC and Governor of BoG, Dr Ernest Addison, in place of the regular press conferences that often follow the conclusion of the committee’s quarterly meetings.

It is the second time in a row that the bank has called off a press conference to announce a decision from the MPC.

Dr Addison said the planned reduction in expenditures was prudent, given the current fiscal situation.

Last week, the Minister of State at the Ministry of Finance, Mr Charles Adu Boahen, said the expenditure budget of MDAs would cut by 20 per cent this year as part of measures to ensure fiscal consolidation.

He said the exercise, which would commence in the first quarter of this year, would neither affect economic growth nor the fiscal deficit target for 2022.

The Governor said the policy measures was necessary and would help to provide for some correction, avoid the opening up of macroeconomic imbalances, and further deepen the fiscal consolidation agenda.

He said it also expected a steadfast implementation to dampen inflationary pressures.

Price pressures

The Chairman of the MPC said headline inflation had remained above the upper band of the bank’s medium-term target of 8±2 percent since September 2021.

He said all the core inflation measures, and inflation expectations have also increased, pointing to heightened underlying inflation pressures.

“The latest forecast shows that inflation would likely remain above target in the near-term, driven by both external and domestic factors, and only return to target in about four-quarters ahead. The key risks to the inflation outlook include: rising crude oil prices and its transmission to ex-pump petroleum prices and transportation costs, rising global inflation, food price uncertainties, and the fiscal outlook,” he said.