Inflation risks, liquidity conditions, monetary policy transmission and global oil market volatility will dominate this week’s Monetary Policy Committee (MPC) meeting of the Bank o
The report indicates that inflation risks, liquidity conditions, monetary policy transmission and global oil market volatility will dominate this week’s Monetary Policy Committee (MPC) meeting of the Bank of Ghana (BoG).
It further notes that dr Johnson Pandit Asiama, Governor of the BoG, outlined the four issues on Monday as he opened the committee’s 131st meeting.
He stated the committee would assess whether the Bank’s current policy framework remained appropriate amid changing domestic and global conditions.
The MPC will examine the recent rise in inflation and inflation expectations.
It will also assess the effectiveness of reforms to the cash reserve ratio framework, the impact of tighter liquidity after the termination of central bank refinancing for gold purchases, and the effects of oil market volatility on the balance of payments, reserves and the exchange rate.
On inflation, Dr Asiama stated the committee would weigh external commodity price pressures against possible increases in utility tariffs and transport fares.
Those factors, he said, could add a domestic dimension to what began as an external shock.
Regarding policy effectiveness, Dr Asiama indicated persistent rigidity of interbank rates at the lower bound of the policy corridor, which the revised cash reserve ratio framework was designed to address.
On policy transmission, he stated the committee would assess whether reforms to the cash reserve ratio framework had improved the alignment of short-term market rates with the policy rate. It would also consider whether further refinements were needed.
Dr Asiama identified tighter domestic liquidity as another key issue.
The end of central bank refinancing for gold purchases had removed a source of liquidity injection at a time of strong private sector credit growth, he said.
The BoG Governor urged the committee to assess the implications for the current policy stance.
It should also determine whether the balance between stabilisation and structural measures remained appropriate.
Dr Asiama also pointed to renewed volatility in global oil markets.
