Ghana’s Central Bank Keeps Benchmark Interest Rate at 26%

Ghana’s central bank kept its benchmark interest rate unchanged after inflation accelerated in August.

The Bank of Ghana held the rate at 26 percent, Governor Abdul Nashiru Issahaku told reporters in the capital, Accra, Monday. That was in line with the prediction of six of the eight economists surveyed. One said the rate would be cut by 100 basis points and another forecast a 200 basis-point reduction.

Inflation accelerated to 16.9 percent in August from 16.7 percent the previous month. While the central bank targets inflation between 6 percent and 10 percent, price growth has not been in this band for more than three and a half years. The Ghanaian economy expanded 3.9 percent in 2015, the slowest pace in 15 years, according to International Monetary Fund data. The Finance Ministry said in July growth will probably accelerate to between 4.1 percent and 4.3 percent this year as new oil projects start contributing to output.

“Inflation expectations by businesses, consumers and the financial sector also eased on the back of continued stability in the local currency,” Issahaku said. While price growth should slow to within target in the second quarter of next year “upside risks to the inflation outlook are the unanticipated shocks” like fuel and utility prices and their second-round effects, he said.

West Africa’s second-largest economy sold a $750 million Eurobond at a yield of 9.25 percent on Sept. 8 in an auction that was more than four times oversubscribed. The government of President John Dramani Mahama, who will run for a second term in office in December, last year agreed to almost $1 billion in loans from the IMF to help rein in the budget deficit and arrest declines in the cedi.

The currency gained 4.1 percent to 3.8075 per dollar by 11:37 a.m. in Accra.