Bloomberg News

Ghana May Hold Rate at 13% as Growth Adds to Inflation Pressure

July 06, 2011

July 6 (Bloomberg) -- Ghana’s central bank may leave its benchmark interest rate unchanged today as faster growth in the West African nation raises concern that the inflation rate will reverse recent declines.

The Accra-based Bank of Ghana will keep the lending rate at 13 percent, according to six of eight analysts surveyed by Bloomberg. Two people expected a second consecutive reduction of 50 basis points. The decision will be announced at 3 p.m. in Accra, the capital.

“Economic activity is generally very buoyant and the Monetary Policy Committee will want to avoid over-stimulation with its associated inflation risks,” Lisa Lewin, London-based head of sub-Saharan Africa analysis at Business Monitor International, said in an e-mailed note yesterday.

Ghana’s economy grew 23 percent in the first quarter of 2011 following the start of oil production at the Jubilee field, the country’s statistics agency said June 22. Inflation has slowed for three straight months, with the rate easing to 8.9 percent in May.

The Bank of Ghana cut the policy rate four times between November 2009 and July 2010. It was kept on hold for three consecutive meetings before being reduced to 13 percent from 13.5 percent on May 13.

A supplementary budget to be announced by the Ghanaian government by August may see more spending rather than lower deficits, Razia Khan, London-based head of Africa research at Standard Chartered Plc, said by e-mail.

“A cautious approach to monetary policy formulation is required,” she said, forecasting the rate to be maintained.

Ghana wants to narrow its fiscal gap to between 5 percent and 5.5 percent of gross domestic product this year from 6.8 percent in 2010, Deputy Finance Minister Fifi Kwetey said June 28.

--Editors: Emily Bowers, Philip Sanders

To contact the reporter on this story: Moses Mozart Dzawu in Accra at mdzawu@bloomberg.net.

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net.


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