Deloitte West Africa is upbeat about the resilience of the banking system in Ghana despite challenges posed by both exogenous and endogenous macroeconomic factors.
The professional services firm expressed this view in its economic brief centered on the Monetary Policy Rate (MPR) in Ghana and Nigeria, at a time when the Bank of Ghana (BoG) said that its latest confidence surveys conducted in October 2024 reflected a sustained recovery in sentiments.
While consumer confidence was broadly unchanged, business confidence improved as firms met their short-term targets and expressed optimism about company and industry prospects, the BoG said.
“The survey findings were broadly consistent with trends observed in Ghana’s Purchasing Managers’ Index (PMI), which also signaled an improvement in business conditions. The PMI increased to 50.6 in October 2024, up from 49.1 in September,” it said after announcing a decision by the Monetary Policy Committee (MPC) to keep the Policy Rate at 27%.
Regarding the decision to maintain the policy rate, Deloitte said the the 27 % rate will anchor inflation expectations despite short-term pressures.
It is also believed that the maintenance of the policy rate would support the Cedi recovery and ensure external sector stability. It also said the implication of the unchanged policy rate would also boost business and consumer confidence.
The MPC cited a slightly elevated inflation despite a rebound in the stability of the Ghana cedi and a stable domestic economy as the rationale behind the unchanged policy rate of 27.0%.
Deloitte is optimistic the policy rate will support economic growth and prevent inflation from rising.
On the outlook, it said the Ghanaian economy will pick up, driven by rising business confidence and economic activities.
It furthered that the strengthening of the local currency will help stabilise prices further.
Higher Fuel Prices Impacting Cost of Production in Nigeria
In Nigeria, the MPC raised the MPR to 27.50% for the 6th time since January 2024, amidst rising inflation.
Deloitte said.
The concerns were higher fuel prices impacting the cost of production and distribution costs, persistent exchange rate pressure, reflecting high forex demand and elevated core inflation.
Deloitte warned that there will be an implication of further squeeze in disposable income, reduced money supply but tighter credit access and increased cost of borrowing and loan defaults.
Source:
3news.com
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