The inflation outlook for the year 2018 is expected to adjust downwards on the basis of government policy, fiscal consolidation, tight monetary policy and a more stable Ghanaian Cedi, a report by CDH Balanced Fund has revealed.
An outgoing Board Chair of the investment company, Emmanuel Adu-Sarkodee, explained that the tight monetary policy stance by the Bank of Ghana to steer inflation towards the medium term target band of 8 ±2 percent and relative stability of the exchange rates of the local currency, resulted in a continued downward trend.
The headline inflation declined from 15.4% in December 2016 to 11.8% as at the close of 2017, according to the report by CDH.
However, Mr. Adu-Sarkodee, in an interview with www.ghanaweb.com at the third Annual Report forum of the CDH Balanced Fund, predicted a strict monetary policy stance by the Central Bank.
According to him, it is in light of government’s effort to consolidate gains and enhance macro-economic stability.
“Government’s focus on long-term borrowing rather than short-term borrowing, as well as lowering of the Monetary Policy Rate by the Bank of Ghana, is expected to reduce interest rates and drive private sector investments,” he indicated.
He added that the Bank of Ghana’s attempt to streamline the banking sector by increasing the minimum capital requirement of Universal Banks from GHC120m to GHC400m, by December 2018, is expected to result in some more mergers and acquisitions within the financial sector.
Commenting on the fast depreciation of the Cedi against the US Dollar, the financial analyst, the fundamentals of the economy has not changed but strengthened.
To him, the monetary value is not the worst experienced by the country because the 7% depreciation is “pretty normal” since it is not as bad as the situation is being projected.
He, however, maintained that “prospects are bright if we can manage the system adequately.”
