Monetary Policy
MPC Press Release - November 2005
Wednesday, 30 November 2005 00:00

Developments in the Consumer Price Index (CPI) indicate that underlying inflationary developments continue to be relatively subdued with monthly price increases remaining low and within a narrow band. The CPI recorded an average monthly decline of 0.1 percent through the third quarter or 2005, the lowest in the last six years. Food prices declined by an average of 0.2 percent in the third quarter while non-food prices increased by 0.4 percent (the lowest in the last seven years).

Seasonally smaller than expected decline in the food price index, and an uptick in non-food inflation (by 0.3 percent) with the pass-through of petroleum price adjustments pushed inflation (which had peaked at 16.7 percent in March) up from 14.7 percent in August to 15.4 percent in October. In the month of October 2005, the overall CPI declined by 0.2 percent, with the non-food price index increasing by 0.3 percent and the food index declining by 0.6 percent. The Bank of Ghana’s measures of core inflation however, continue to be stable and trending downward within a narrow range.

Growth of the key monetary aggregates in the year through October broadly continued to slowdown. Annual growth of reserve money slowed from 37.4 percent in September 2004 to 21.1 percent in October 2005 while broad money ( M2+) growth has also slowed from 41.6 percent in September 2004 to 16.0 percent in September 2005 (the latest data available).

Interest rate movements in the money market reflected changes in the underlying monetary conditions. Interest rates on the money market continued to decline and the trend has been maintained through the fourth quarter of 2005.

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