Bank of Ghana Holds Interest Rate at 12.50%

The Bank of Ghana held its key lending rate unchanged at 12.50%, pausing after two consecutive 50 basis point cuts.  Bank of Ghana Governor, Kwesi Amissah-Arthur, said: "Inflation expectations are well-anchored and have  stabilized along the single digit path, supported by favourable food prices. The rate has continued to decline and the 9 per cent target for the year is achievable." However the Bank also noted: "Despite the improved macroeconomic fundamentals, upside risks to inflation are emerging in the form of the adjustment in utility tariffs, wage pressures and other oil-induced and external pressures that may result in the overheating of the economy."

The Bank of Ghana previously reduced its lending rate by 50 basis points to 12.50% at its July meeting, after also cutting 50 basis points at its May meeting this year.  Ghana reported inflation of 8.4% in July, compared to 8.6% in June, 8.9% in May, 9.0% in April, and 9.1% in March.  Ghana's economy grew 23% in the March quarter, compared to 9.5% in the previous three months, as Africa's newest oil exporter saw export earnings boosted by oil sales, as well as a high gold price and cocoa volumes.  Ghana's currency, the cedi (GHS), last traded around 1.53 against the US dollar, placing the GHSUSD rate up about 3% this year.

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