IMF

The International Monetary Fund (IMF) has encouraged policymakers all over the planet to show restraint toward their national banks as they work to carry back expansion to the levels they were during the pre-pandemic period.

The Bretton Woods establishment likewise encouraged national banks to communicate clearly inflation expectations.

Internationally, national banks and strategy producers are ordering approaches to assist the revival of their economies from the effect of the feared Covid pandemic.

In Ghana for example, the Governor of BoG and Chairman of the bank’s Monetary Policy Committee, Dr Ernest Addison, reported in an assertion given on Wednesday [March 18, 2020] a decrease in its benchmark strategy rate by 150 premise focuses as its first reaction to the strain that the Coronavirus illness (COVID-19) is forcing on the economy.

The assertion followed the finish of the 93rd MPC meeting which audited exercises in the economy and the effect of worldwide improvements on the neighborhood front.

Dissimilar to before when the panel’s gatherings were trailed by question and answer sessions, the bank gave an assertion in consistence with the mandate to stay away from parties right after the COVID-19 scourge.

The decrease in the rate is the first since November, 2018 and is relied upon to consolidate with different elements to make cost of credit less expensive.

According to BoG, headline inflation is above the upper limit of the medium-term target band and the Committee noted significant risks to the inflation outlook, the central bank said.

“Headline inflation has risen consistently from the low of 7.5% in May 2021 to 11.0% in October driven by both food and non-food price increases. In addition, all the Bank’s core measures of inflation have increased, indicating broad-based underlying inflation pressures, with the potential of de-anchoring inflation expectations. Currently, headline inflation is above the upper limit of the medium-term target band and the Committee noted significant risks to the inflation outlook”.

“These risks include rising global inflation, high energy prices, uncertainties surrounding food prices and investor behaviour. The Committee further noted that these elevated inflationary risks, require prompt policy action to re-anchor inflation expectations to safeguard the central bank’s price stability objective.

“Given these considerations, the Committee therefore decided to raise the policy rate by 100 basis points to 14.5 percent”, the Montary Police Committee (MPC) detailed report stated.

The Central Bank further said the country’s sovereign bond spreads widened markedly over the period as investor sentiments shifted based on fiscal and debt sustainability concerns, prompting some sell-offs by investors with spillovers on the domestic foreign exchange market. This triggered some currency pressures in the past two months as demand for the U.S. dollar increased.

“However, the adequate reserve levels provided some buffers and supported a much slower depreciation pace compared with pre-pandemic levels. In the outlook, the Committee is of the view that the strong reserve buffer level should provide some assurance to the market and help abate investor concerns, as the country’s external payment position remains strong”, it pointed out.

In Ghana for example, the Governor of BoG and Chairman of the bank’s Monetary Policy Committee, Dr Ernest Addison, reported in an assertion given on Wednesday [March 18, 2020] a decrease in its benchmark strategy rate by 150 premise focuses as its first reaction to the strain that the Coronavirus illness (COVID-19) is forcing on the economy.

The assertion followed the finish of the 93rd MPC meeting which audited exercises in the economy and the effect of worldwide improvements on the neighborhood front.

Dissimilar to before when the panel’s gatherings were trailed by question and answer sessions, the bank gave an assertion in consistence with the mandate to stay away from parties right after the COVID-19 scourge.

The decrease in the rate is the first since November, 2018 and is relied upon to consolidate with different elements to make cost of credit less expensive.

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