The Monetary Policy Committee (MPC) of the Bank of Ghana has decided to maintain the bank's prime rate at 18.5 percent.
Announcing its decision in Accra on Friday, the MPC painted a firmly stable economy and predicted that the year will end with strong and improved fundamentals.
According to the MPC, inflationary pressures continued to be subdued and the cedi exchange rate was relatively stable.
This it says was underpinned by a significant improvement in the fiscal and external payments positions.
Headline inflation declined marginally from12.9 percent in August to 12.6 percent in September.
The committee said domestic demand and economic activity have also been strong and it projects a higher GDP growth than initially forecast for this year.
The Chairman of the committee, Dr. Paul Acquah said interest rates on the money market remained relatively stable during the third quarter of the year as was fiscal developments over the period. He said, “Fiscal developments for the ten months of the year indicate a continued process of consolidation of public finances on the path of deficit and domestic-debt reductions, which is an important source of relatively stable macroeconomic environment.”
Looking ahead, Dr. Paul Acquah said the economy is set for a smooth flight into next year. However question marks still remain over the impact of crude oil prices and the on going deregulation of the petroleum sector.
He said, “ The risk in the outlook is associated with the global uncertainty surrounding the course of crude oil prices which would need to be managed in a deregulated domestic market to achieve a balance in its impact on the budget, domestic costs and prices.”
Dr. Acquah added that the 2005 government budget will need to be appropriately positioned in a “continued policy of fiscal consolidation supported by prudent price and wage setting behaviour in the economy to underpin stability.”