The Monetary Policy Committee (MPC) is set to maintain the prevailing policy rate at 30% during its forthcoming meeting in November 2023, as per reports by GCB Capital Research. The outlook reveals a discernible disinflation process in motion, with expectations of a continued decrease in inflation levels throughout the fourth quarter of 2023, notwithstanding emerging upside risks.
In the analysis put forth by GCB Capital Research, the ongoing macroeconomic and structural reforms, notably frontloaded fiscal tightening, debt restructuring efforts, and the memorandum on zero-deficit financing, are projected to be instrumental in anchoring the disinflationary trajectory.
This suggests that the MPC may opt for a rate-neutral stance through January 2024 to further underpin the disinflation process, with a potential shift in monetary policy stance expected by March 2024 if improvements in the inflation outlook materialize.
Furthermore, GCB Capital posits that nominal interest rates will continue their upward trajectory in the coming quarter, albeit at a moderated pace, as the negative real return gap gradually narrows.
In a move that aligns with these predictions, the Monetary Policy Committee of the Bank of Ghana (BoG) retained the key lending rate at commercial banks at the 30% mark during the September 2023 meeting. Governor of the Bank of Ghana, Dr. Ernest Addison, explained that this decision was informed by the positive response of various macroeconomic indicators to previous measures aimed at curbing inflation.
Dr. Addison emphasized that the Committee’s decision to maintain the policy rate at 30% is anchored in the anticipation of sustained disinflation. However, he also noted the readiness of the Committee to respond judiciously should inflation veer off course from these overarching expectations. The stance reflects a delicate balance struck by the central bank in its bid to navigate the intricacies of monetary policy in a dynamically changing economic landscape.
