The Bank of Ghana (BoG) is forecasting a peak in inflation later this year before trending back towards the medium-term horizon.
According to the Central Bank, this is due to the risk to the inflation outlook as result of increased commodity prices, particularly crude oil.
The rest are heightened supply chain disruptions, and the over 20% increase in utility tariffs set to kick in from 1st September, 2022”.
The warning was contained in an address by the First Deputy Governor of the BoG, Dr. Maxwell Opoku Afari read on his behalf by Dr. Philip Abradu Otoo, Director of Research at a Financial Literacy Workshop for Journalists in the Northern Zone of Ghana.
The two-day training workshop was organised for selected Business and Financial Reporters in Tamale, Northern Region.
It was under the theme: “Sustaining the Recovery: The Role of the Journalist in Building Confidence”.
Implications
It is not clear for now what the forecast by the Central Bank will mean for the current rate of inflation pegged at 31.7% in July 2022.
Some observers have said it could show that the trend will go up further in the month of September and October 2022.
By this, some have observed whether if the Monetary Policy Committee of the Bank of Ghana will hike the policy rate again to deal with the fresh challenge.
The Bank of Ghana recently justified the increase in the policy rate to 22% because of threats to the inflation rate outlook.
Financing government
The First Deputy Governor noted that the Central Bank’s overdraft to government has helped close the financing gap as reflected in the Mid-Year Budget review.
This challenge, the Dr. Opoku-Afari, said is as a result of the access to the international capital market and given the constrained domestic financing.
It is expected that the ongoing policy discussions with the International Monetary Fund (IMF) will help address the underlying macroeconomic challenges, restore fiscal and debt sustainability, and re-anchor sustainable balance of payments”.
Banking sector development
The First Deputy Governor was quick to add that the remarkable resilience of the banking sector over the last two=year period could be attributed to the comprehensive financial sector reforms that took place before the Covid-19 pandemic struck in 2020.
The sector has since remained liquid, profitable, and well-capitalised”, he noted.
Dr. Opoku-Afari added that the industry’s measure of solvency, the Capital Adequacy Ratio, has remained well above the revised regulatory 13% prudential limit
Training for Journalists
Dr. Opoku-Afari highlighted the role of the media “during periods of heightened uncertainty when all kinds of news including fake news are rife on social media, even at times within mainstream media”.
The spread of such misinformation has the potential to jolt financial markets and create panic among the general public with dire implications for financial stability”, he added.
The training workshop was aimed at equipping journalists with a better understanding of issues including monetary policy formulation, inflation targeting, forex trading and the foreign exchange market, balance of payments and the BoG’s eCedi.
The training workshop is part of efforts by the Central Bank to build a strong pool of financial and business journalists who will help the public to appreciate and understand its programmes and policies.
The participants at the workshop were drawn from the Northern, Upper East, Upper West and East Regions.
The Central Bank in June 2022, organized a workshop for journalists in the southern zone