Bloomberg News

Ghana Central Bank Keeps Key Rate at 12.5% After Cedi Falls

October 19, 2011

(Updates with comment from governor in fourth paragraph, cedi in fifth and gold exports in last.)

Oct. 19 (Bloomberg) -- Ghana’s central bank left its benchmark interest rate unchanged for a second consecutive meeting as a weaker currency offset lower food prices in Africa’s newest oil producer.

The key lending rate was held at 12.5 percent, Governor Kwesi Amissah-Arthur told reporters today in the capital, Accra. That was in line with the forecasts of all nine economists surveyed by Bloomberg.

Inflation, which was unchanged at 8.4 percent for a third consecutive month in September, may accelerate after the cedi slumped 7.2 percent against the dollar since Aug. 1, boosting import costs. Price pressures are also rising after the government increased water and electricity costs and lifted wages for civil servants by 20 percent in August.

“We are worried about the depreciation of the currency,” the governor said. “The upside risks in the outlook are wage pressures, payment arrears and the weakness of the cedi.”

The cedi fell as much as 0.4 percent to 1.6360 against the dollar after the rate decision and was trading at 1.6330 at 12:22 p.m. in Accra.

“While inflation will remain well-behaved for now, a key risk to watch going forward is the impact of recent cedi depreciation on the price level,” Razia Khan, head of Africa economic research at Standard Chartered Plc in London, said in an e-mail today. “An upward rate adjustment may well be needed in the first quarter.”

Ghana became Africa’s newest oil exporter in December, when production started at the offshore Jubilee field, which is operated by U.K.-based Tullow Oil Plc. Ghana is the world’s second-largest cocoa producer after Ivory Coast and the continent’s No. 2 gold producer after South Africa.

Gold exports for the nine months through Sept. 30 was $3.7 billion, while cocoa reached $1.7 billion, the central bank said today.

--Editors: Nasreen Seria, Karl Maier

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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