Bloomberg News

Ghana Central Bank Keeps Benchmark Interest Rate Unchanged

September 01, 2011

(Updates with economist’s comment in fourth paragraph.)

Sept. 1 (Bloomberg) -- Ghana’s central bank left its benchmark interest rate unchanged for the first time in three meetings as growth in Africa’s newest oil exporter surged, adding to pressure on inflation.

The key lending rate was kept at 12.5 percent, Governor Kwesi Amissah-Arthur told reporters today in the capital, Accra. Three of seven economists surveyed by Bloomberg forecast the decision, while the rest expected a rate cut.

Ghana’s economy expanded 23 percent in the first quarter following the start of oil production at the Jubilee field, the statistics agency said June 22. Rising wage demands, higher power and water costs and climbing oil prices may result in the “overheating of the economy,” threatening to boost inflation, which was at 8.4 percent in July, the governor said.

“The Monetary Policy Committee is of the view that inflation has bottomed and that there are upside risks to inflation,” Yvonne Mhango, an economist at Renaissance Capital in Johannesburg, said in an e-mail today. “Part of that risk may include the increase in utility tariffs.”

The cedi was little changed at 1.5277 against the dollar today, taking its gain this year to 2.8 percent.

Rate Cuts

The central bank reduced the lending rate four times between November 2009 and July 2010. It was kept on hold at 13.5 percent for three consecutive meetings before being lowered by half a percentage point at the past two meetings.

Producer-price inflation accelerated for the first time since April to 14 percent in July, the statistics agency said Aug. 24. Costs may increase further after the government raised tariffs on water by 6.7 percent and electricity by 7 percent this month.

“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,” Amissah-Arthur said.

Ghana’s exports surged 62 percent to $7.5 billion between January and July compared with a year earlier, fueled by higher output of gold, cocoa beans and oil, the governor said. Crude oil exports amounted to 12.6 million barrels, valued at $1.4 billion, while gold shipments reached $1.5 billion. Cocoa was the biggest earner at $2.8 billion, he said.

Ghana is the world’s second-largest cocoa exporter after Ivory Coast and the continent’s No. 2 gold producer after South Africa.

--Editors: Gordon Bell, Nasreen Seria, Karl Maier

To contact the reporter on this story: Moses Mozart Dzawu in Accra at

To contact the editor responsible for this story: Antony Sguazzin at

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