The Bank of Ghana (BoG) has projected that inflation would trend back towards the medium-term horizon over the next four quarters.
In March 2022, Ghana’s inflation rate reached an all-time high of 19.4 percent from 15.7 percent in February.
The figure has largely been attributed to the global Coronavirus pandemic and the conflict between Russia and Ukraine that has affected the prices of commodities on the international market.
At the moment, headline inflation has shifted above the upper band of the medium-term target, driven mainly by food prices, upward adjustments in ex-pump petroleum prices, transport costs, and pass-through of exchange rate depreciation.
Delivering a speech on behalf of the first Deputy Governor of the central bank, Dr. Maxwell Opoku-Afari, BoG Director of Research, Mr. Philip Abradu-Otoo, said his outfit foresees inflation returning to the medium-term horizon in the next four quarters.
“The latest data shows that headline inflation rose sharply to 19.4 percent in March 2022 from 15.7 percent in February on the back of significant increase in food inflation. In addition to these trends, there are significant upside risks to the inflation outlook, including increased commodity prices, particularly crude oil, and intensified supply disruptions.
“The Bank’s forecast indicates that inflation would trend back towards the medium-term horizon over the next four quarters,” Mr. Philip Abradu-Otoo said during a workshop for financial journalists on Thursday, April 28, 2022, at the Ecobank head office in Accra.
He stressed that the remarkable resilience exhibited by the banking sector over the two-year period could be attributed to the comprehensive financial sector reforms that took place before the Covid-19 pandemic struck in 2020.
He assured that the banking sector continues to remain liquid, profitable, and well-capitalized.
While the industry’s measure of solvency, the Capital Adequacy Ratio, has remained well above the revised regulatory 13 percent prudential limit, the BoG notes that asset quality, however, declined marginally.