BoG to hold policy rate at 14.5…as virus resurges
By Elorm Desewu
With inflation inching up slightly to 10.4 percent for the 12
months period ended December 2020, from 9.8 percent in November, the Monetary
Policy Committee of the Bank of Ghana is likely to hold the policy rate at 14.5
percent for the next couple of months, as it prepares to review the health of
the economy.
The policy is rate is the rate at which the BoG lends to the
various banks as their last resort and also serves as benchmark is setting the
Ghana Reference Rate.
Most economists don’t think there is scope for strategic easing
of monetary policy in 2021, as the COVID 19 pandemic resurges.
The fiscal and monetary policy measures, which have increased
liquidity in the economy, appear not to be impacting on inflation, partly due
to the existence of the output gap. As a result, the BoG expects these
conditions to support inflation to return to its central path by the second
quarter of 2021.
The expansionary fiscal stance to address the COVID-19 pandemic
has also led to deviation from the path of fiscal consolidation. Looking ahead
to 2021, a decisive fiscal correction plan would be needed to contain fiscal
risks in the medium-term.
The year-on-year inflation rate rose to 10.4 per cent in
December compared to 9.8 per cent the previous month, the Ghana Statistical
Service said last week.
The rate is 0.6 percentage point higher than the rate for
November, 2020.
The month-on-month inflation between November and December 2020
was 0.9 per cent.
Professor Samuel Annim, the Government Statistician, at a press
briefing attributed the increase in overall inflation to the high food
inflation.
Food contributed 59.1 per cent to the overall inflation, the
highest contribution recorded since April 2020, when COVID-19 started to affect
Ghana.
He said without this increase, the year-on-year inflation would
have been lower than last month.
The variation between Food (14.1 per cent) and Non-Food
inflation (7.7 per cent) was 6.4 per cent, while the difference between locally
produced items (12.1 per cent) and imported items (6.1 per cent) was 6 per cent
The month-on-month (November 2020 – December 2020) Food
inflation was 1.5 per cent.
The Food inflation rate for the month of December was 14.1 per
cent compared to the previous month of 11.7 per cent.
The Non-food Inflation was 7.7 per cent compared to the
previous month of 8.3 per cent.
Meanwhile, the month-on-month Non-Food inflation was 1.5 per
cent with inflation for locally produced items was 12.1 per cent with the
inflation for imported items standing at 6.1 per cent.
Again like previous months, just two of the thirteen Divisions
had higher than average inflation rates; ’Housing, Water, Electricity, Gas’ had
20.1 per cent down from 21.0 per cent last month and ‘Food and Non-Alcoholic
Beverages’ had 14.1 per cent up from 11.7 per cent last month.
On regional basis, the overall year-on-year inflation ranged
from 2.1 per cent in the Upper West Region to 16.3 per cent in Greater Accra
Region.
With the exception of Upper West Region with -0.4 per cent food
inflation and 4.6 per cent non-food inflation, all regions recorded higher food
inflation than non-food inflation.
Compared to last month, only Ashanti, Brong Ahafo and Upper
West Region had a lower food inflation this month.
The biggest difference was recorded in Central Region with 3.5
per cent to 12.8 per cent.
0 comments: