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(Xinhua) -- The Monetary Policy Committee (MPC) of Ghana's central bank has maintained its benchmark policy rate at 21 percent, Governor of the Bank of Ghana, Ernest Addison announced here on Monday.


The decision halts the series of slashes in the policy rate starting from March when the rate was reduced by 200 basis points to 23.5 percent from the previous 25.5 percent.


The policy stance has been easing since March in line with declining inflation pressures which started at the beginning of the year, with analysts projecting a further reduction in the policy rate at the just ended MPC round.


"At this MPC round however the committee decided it was time to pause the easing cycle in view of emerging risks to the inflation outlook, while remaining vigilant and committed to respond and take necessary policy actions should these initial signs of underlying pressures persist. Consequently, the committee decided to maintain the monetary policy rate at 21 percent," Addison announced.

Inflation started easing from January 2017 when it decreased to 13.3 percent from 15.5 percent in December 2016, till July when it went further down to 11.9 percent. August however saw the resurgence of consumer inflation by 0.4 percentage points to 12.3 percent.


The governor underscored the need for further monitoring of inflation pressures, adding that the uptick in core inflation is symptomatic of emerging inflationary pressures.


"There have been upward adjustments in ex-pump petroleum prices which are likely to transmit through prices in coming months and pose some risks to the inflation outlook," Addison projected.


He added:"these notwithstanding, the latest forecasts show that medium term inflation target is achievable in 2018. This forecast is contingent on continued fiscal consolidation and exchange rate stability."


The country targets to achieve an 8 percent inflation rate (with the margin of error of two) by 2018.


On fiscal consolidation, the governor said the process was on course, adding, "Although expenditures remained within targets, the pace of spending has picked up in June and July."


"The continued revenue under-performance could however pose some challenges to the fiscal outlook," the governor cautioned.


Surprising as the maintaining of the policy rate was to analysts, many still believe the rate could still dip further before the end of year.


"A surprise non-move by the Bank of Ghana, keeping its policy rate unchanged at 21percent. We are not reading very much into this. We still see a comfortable deceleration in trend inflation in Ghana, as a result of tight policy.


"Our year-end interest rate forecast of 19.5 percent therefore remains in place," Razia Khan, Chief Economist for Africa and Global Research at Standard Chartered Bank told Xinhua.


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