No external influence on policy-rate decisions -BoG

The Bank of Ghana has dismissed suggestions that its decisions on the Prime Lending Rate also called the Policy Rate could sometimes be influenced by research institutions other than Government owned.

The Central bank said under no circumstance would such decisions be informed in anyway by any external research institutions other than that of government like the statistical service.

This comes ahead of the regular economic review meeting of the Monetary Policy Committee (MPC) of the Bank which commences later today Monday, April 12.

The last meeting in mid-February culminated in a 3-year high reduction of the Policy Rate by 200 basis points- mainly under-lied in the consistent positive developments in the pertinent economic-indicators in the last five months of last year.

The reduction was associated with projections by several private sector institutions.These included the parent company of Stanbic Bank, the Standard Bank PLC which projected a 200 basis-points reduction and the Centre for Policy Analysis (CEPA) which also projected a 100 basis-points reduction- all based on their respective research data.

The Governor of the Bank of Ghana, Paa Kwesi Amissah Arthur however said their decisions are always entirely independent of such predictions and rather based on research-data exclusive to them.

According to him, “the MPC's decisions are based on the fundamentals they see and MPC have access to first hand data from the monitoring systems and government payments.”

He added that during MPC meetings, they look at global events, the balance of payment, and data from the statistical service and they do their own surveys.

“We ascertain if there are challenges ahead that we must stem or if there are incentives that can created to encourage economic activities… for instance, if in April we find that there are pressures on the fiscal side of the economy that we cannot surmount, we will take the proper decision.” He noted.

Meanwhile, the Central bank has reiterated its position to exercise utmost prudence in reducing the Policy Rate with indications of rather adopting a gradual approach in the process as inflation eases.

With the pertinent economic variables continuing their positive trends in the period under review, a further reduction in the Policy Rate is however expected. And this cannot be known until Friday when MPC announces the outcome of its economic review meeting which begins later yesterday.