Bank of Ghana leaves prime rate unchanged at 16.0% - CNBC Africa

Bank of Ghana leaves prime rate unchanged at 16.0%

Western Africa

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Bank of Ghana headquarters. PHOTO: Ghana Web

The bank argued that risks stemming from high inflation were structural and did not require a policy adjustment for now.

Ghana produces gold, cocoa and oil and is considered one of Africa's brightest economic prospects. But inflation and the government deficit remain stubbornly high, while debt levels are rising.

"The committee held the view that the upside risks to inflation are mainly structural and therefore do not need to be addressed by a policy rate adjustment at this time," Central Bank Governor Henry Kofi Wampah said after a meeting of Ghana's monetary policy committee.

Wampah said leaving rates on hold posed no significant risk to economic growth, which is forecast to reach 8 percent next year. Ghana has kept its prime rate at 16 percent since May.

Earlier in the day, Ghana's statistics office said annual producer price inflation jumped to 11.6 percent in October from a revised 5.8 percent in September, mainly because of higher utility prices.

The spike in producer inflation comes after consumer price inflation rose to a fresh three-year high of 13.1 percent in October.

Ghana's central bank has said CPI is likely to exceed the 11 percent upper limit of its 2013 target range. Wampah said inflation is expected to remain within two percent band of 9.5 percent for 2014.

Razia Khan, the head of Africa research at Standard Chartered, said the central bank had largely been expected toleave rates on hold, but a move was likely soon.

"Given the upward prThe Bank of Ghana left its main policy rate at 16.0 percent on Wednesday, arguing that risks stemming from high inflation were structural and did not require a policy adjustment for now.

Ghana produces gold, cocoa and oil and is considered one of Africa's brightest economic prospects. But inflation and the government deficit remain stubbornly high, while debt levels are rising.

"The committee held the view that the upside risks to inflation are mainly structural and therefore do not need to be addressed by a policy rate adjustment at this time," Central Bank Governor Henry Kofi Wampah said after a meeting of Ghana's monetary policy committee.

Wampah said leaving rates on hold posed no significant risk to economic growth, which is forecast to reach 8 percent next year. Ghana has kept its prime rate at 16 percent since May.

Earlier in the day, Ghana's statistics office said annual producer price inflation jumped to 11.6 percent in October from a revised 5.8 percent in September, mainly because of higher utility prices.

The spike in producer inflation comes after consumer price inflation rose to a fresh three-year high of 13.1 percent in October.

Ghana's central bank has said CPI is likely to exceed the 11 percent upper limit of its 2013 target range. Wampah said inflation is expected to remain within two percent band of 9.5 percent for 2014.

Razia Khan, the head of Africa research at Standard Chartered, said the central bank had largely been expected to leave rates on hold, but a move was likely soon.

"Given the upward pressure on inflation, reinforced by the jump in PPI to double digits, we think there is still a case for further tightening in this cycle," she said. "We forecast a 100 basis point rate hike, most likely in January."

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