We are Headed Toward a Significant Reduction in Inflation - BoG Governor

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Dr. Ernest Addison, the Governor of the Bank of Ghana, has expressed optimism regarding the trajectory of inflation, indicating the Central Bank's determination to significantly reduce inflation. 

He highlighted the ongoing implementation of robust policies as the cornerstone of this effort, aiming to firmly anchor inflation expectations towards the target of single-digit figures.

Related To This: BoG To Reduce Policy Rate by 8% to 22% in 2024 - Fitch Reports

Addressing a meeting involving the Country Representative of the International Monetary Fund and the Minister of Finance, Ken Ofori-Atta, the Governor emphasized the Bank's commitment to closely monitoring both domestic and external developments. 

This vigilance is aimed at ensuring that the recent downward trend in inflation, observed in the past months, continues without impeding economic growth. Dr. Addison also drew attention to the noteworthy 2023 experience, which saw a substantial reduction in inflation alongside strengthened economic growth, underscoring its instructive nature.

The Governor underscored the transformative impact of resolute policies and the relatively stable exchange rate in curbing inflation, pointing out that in January 2023, inflation stood at a staggering 54%. Through resolute monetary measures and exchange rate stability, the inflation rate was more than halved, ending the year 2023 at 23.0%.

Furthermore, Dr. Addison attributed the successful disinflation process to a confluence of factors, including the consistent monetary policy stance throughout 2023, stable crude oil prices leading to predictable fuel costs and a positive effect on transportation expenses, a steady exchange rate environment, enhanced foreign exchange reserve accumulation via the gold for reserve program, and favorable climatic conditions benefiting the food supply chain.

Related To This: We Have Hope For The Economy's Recovery- Deputy Governor Of BoG

Looking forward, he also alluded to the imminent phase of the IMF Program, emphasizing the need to contemplate the second review and beyond. While acknowledging promising signs of effective policy implementation throughout 2023, Dr. Addison stressed the necessity for sustained vigilance and dedication in 2024 to execute the structural reforms envisioned under the program. He concluded by highlighting the critical nature of these reforms in ensuring the optimal functioning of the economy.

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