Ghana's central bank maintained its monetary policy rate at 19 percent, saying inflation was expected to peak in the near term and return to the bank's target range in the second half of 2015 after remaining slightly above the upper limit of the target during the rest of this year.
The Bank of Ghana, which has tightened its policy this year by raising the policy rate by 300 basis points and the cash reserve ratio by 200 points, said the outlook for economic growth was generally positive based on expected higher output of cocoa and oil while gas production that is expected to come on stream later this year will help address some of the energy challenges.
Ghana's inflation rate rose to 15.9 percent in August from 15.3 percent in July, with non-food inflation up to 24 percent from 20 percent in May, mainly driven by the impact of the depreciation of the cedi currency. Food inflation eased to 5.1 percent in August from 8 percent in May.
The Bank of Ghana currently targets inflation of 13 percent, plus/minus 2 percentage points.
Despite the generally positive growth outlook, the central bank took note of softened business confidence and heightened inflation expectations and said it was facing challenges from fiscal pressures and the volatile exchange rate though there had been "some stability" in the foreign exchange market following its policy tightening.
"In addition, the expected inflows from the Eurobond and the cocoa syndicated loan will provide liquidity on the foreign exchange market" while the government's fiscal consolidation efforts are expected to be strengthened as part of the fresh talks with the International Monetary Fund (IMF) that will should also help the balance of payments.
Ghana's cedi currency has depreciated by 29.8 percent against the U.S. dollar from January through August compared with a decline of only 3.9 percent last year but has been facing energy shortages that was worsened by lower gas supplies from Nigeria.
In the last few weeks, the cedi's exchange rate has stabilized, trading at 3.59 to the dollar today, up from a low of 3.85 on Aug. 21.
Ghana's gross international reserves as of end-August were estimated at US$ 4.2 billion, the equivalent of 2.4 months of imports, down from $5.6 billion at the end of 2013.