Bank of Ghana keeps policy rate unchanged at 17 pct

A man trades U.S. dollars for Ghanaian cedis at a currency exchange office in Accra, Ghana, June 15, 2015. REUTERS/Francis Kokoroko

Kwasi Kpodo

ACCRA (Reuters) – Ghana’s central bank kept its benchmark interest rate unchanged at 17 percent on Monday as expected, mindful of possible inflationary headwinds as the dollar strengthened, governor Ernest Addison said.

Monday’s decision to hold rates steady, the second this year, would also help to cushion any spillover effect from fuel price increases and a potential trade war between the United States and China, Addison told reporters in Accra.

He said the most recent forecast showed the rate of disinflation slowing marginally on possible second-round effects of recent increases in petroleum prices, exchange rate depreciation and tax increases.

Ghana is a major commodity exporter but its cedi currency has been unstable since May, touching new lows this month, as investors pulled away from emerging market assets.

“Given these considerations and weighing the balance of risks, the committee decided to keep the policy rate unchanged, but will continue to monitor closely developments in the coming months and take the appropriate actions to address any potential threats to the inflation outlook,” Addison said.

Ghana’s public debt rose to $33.9 billion as at July, representing 66 percent of Gross Domestic Product while net reserves stood at $3.8 billion or two months’ import cover, down from $4.1 billion in June.

An outright majority of economists and analysts polled for Ghana, Kenya, Nigeria and South Africa last week said their central banks would hold rates at 17 percent, 9 percent, 14 percent and 6.50 percent respectively at their September meetings.

Reporting by Kwasi Kpodo; Editing by Toby Chopra

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