Ghana leaves MPR unchanged at 30%

The Bank of Ghana's Monetary Policy Committee has opted to keep its main interest rate steady at 30% following a slowdown in annual inflation for the third consecutive month in October. Richmond Frimpong, a Financial Advisory Consultant, weighed in on the decision during an interview with CNBC Africa. Frimpong highlighted the central bank's unwavering focus on price stability, emphasizing the importance of using monetary policy tools to target and reduce inflation rates. Despite initial hopes of reaching the target inflation rate of around 8% plus or minus 2% by the year's end, Frimpong expressed skepticism about achieving this goal given the prevailing economic conditions. The potential impact of unforeseen external factors such as rising international crude oil prices and utility price adjustments further complicates the central bank's efforts to steer the economy back on track. Concerns over revenue mobilization and domestic revenue generation were also discussed, with Frimpong acknowledging the government's efforts to increase taxes to bolster revenue streams. However, he underscored the importance of aligning revenue strategies with effective resource allocation to address existing deficits. Additionally, discussions surrounding debt restructuring with bilateral and commercial creditors, particularly China, highlighted ongoing challenges in managing the country's debt obligations. Frimpong noted that navigating these negotiations amid delays in securing the second tranche of the IMF extended credit facility could strain Ghana's reserves and pose further economic hurdles. The interview also delved into the performance of the Ghanaian cedi, with Frimpong attributing improvements to balance of payment corrections and IMF programs. While acknowledging the currency's relative stability, he emphasized that the strengthening of the reserve position played a pivotal role in supporting the cedi's performance. Lastly, the conversation touched on Ghana's economic growth projection of 2.8%, a figure that falls short of the significant boost needed to propel the country forward. Despite regional growth disparities within sub-Saharan Africa, Frimpong expressed reservations about Ghana's growth trajectory, cautioning that a 2% expansion may not be sufficient to drive substantial economic progress going forward.