Bank of Ghana holds prime rate at 15 percent

ACCRA (Reuters) - The Bank of Ghana's Monetary Policy Committee held its prime interest rate unchanged at 15 percent on Wednesday, citing a stabilisation of the local cedi currency and a balanced economic outlook.

Analysts said the decision - the third rate hold by the bank since June - was in line with what they had expected.

"The reduced volatility in the foreign exchange market has helped to lower inflation expectations," acting bank governor Henry Kofi Wampah told a news conference.

"The committee is of the view that the risks to inflation and growth are fairly balanced and has therefore decided to maintain the policy rate at 15 pct," he said.

The West African state's statistics office said earlier on Wednesday that the pace of inflation eased in October for the second straight month to 9.2 percent from 9.4 percent.

Ghana's statistics office attributed the dip to seasonal effects and stability of the cedi which tumbled by about 18 percent in the first half of the year on import demand to feed the country's rapid economic growth.

The cocoa, gold and oil producer nation's economy grew by more than 14 percent last year and the government expects growth over just over 7 percent in 2012.

"The pull-down effect is mainly the fact that we are in the harvest season, and the recent stability of the local currency," acting government statistician Philomena Nyarko said of the decline in the pace of inflation.

The cedi was trading at 1.8761/1.8811 to the dollar at 1300 GMT according to Reuters data.

Samir Gadio, an emerging markets strategist at Standard Bank, said the rate decision was expected, particularly ahead of a presidential election in early December.

"There was certainly no need for a hike since short-term market rates are already much higher (22-23 percent), and especially because this would have been controversial prior to the next elections," Gadio said, adding cedi stability was also an important factor.

Databank Ghana analyst Sampson Akligoh said keeping the rate on hold will allow the bank to try to re-align treasury yields to the policy rate after disparities arose during the currency shocks earlier in the year.

"I think this re-alignment can help support economic activity during the festive season despite the rate being kept steady," he said.

Source: http://news.yahoo.com/bank-ghana-holds-prime-rate-15-percent-154630492--business.html

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