Ghana's central bank maintained its monetary policy rate at 21.0 percent on balanced risks to inflation and economic growth, adding that disinflation is likely to continue this year despite a rise in food and core inflation so inflation heads towards the bank's target later in 2016.
The Bank of Ghana (BOG), which raised its rate by 500 basis points in 2014 to contain inflation, targets inflation of 8.0 percent, plus/minus 2 percentage points.
Economists had expected the BOG to maintain its rate while it concludes talks with the International Monetary Fund (IMF) on a loan aimed at funding its budget deficit and supporting the cedi currency, which took a sharp tumble in mid-2014 and has begun to depreciate again this year.
The cumulative depreciation of the cedi in 2014 was 31.2 percent compared with 14.5 percent in 2013 but in January the decline eased to 1.3 percent from 7.8 percent in January 2013.
After accelerating in the second half of 2014, Ghana's headline inflation rate eased to 16.4 percent in January from 17 percent in December although the BOG noted that food inflation had risen to 6.9 percent from 6.8 percent.
Gross foreign assets, i.e. international reserves and encumbered assets and petroleum funds, was stable at US$44.9 billion at the end of January from the same period in 2014.
The government's budget deficit narrowed to 7 percent of Gross Domestic Product in 2014 from 8.3 percent in 2013 but total public debt rose to 76.1 billion cedi, or 67.1 percent of GDP, up from 51.9 billion, or 55.3 percent of GDP, in 2013.
Although the BOG latest confidence survey in January showed an improvement in consumer and business confidence, the BOG said the risks to growth remain tilted to the downside due to challenges to the energy sector, expected fiscal consolidation, the tight monetary policy stance and the adverse impact of lower crude oil prices.
The deal with the IMF, along with the addition of the Atuabo gas processing plant, a pick-up in consumer and business sentiment and strong growth in credit to the private sector should help offset some of those risks.