Ghana central bank holds main policy rate steady at 19 pct

• Central bank holds rate after 100 bps hike in July

• Bank governor cites concerns over inflation

• Ghana cedi boosted by forex inflow from Eurobond, loan

• Gas pipeline, hit by Nigeria strike, poses risk to GDP

Ghana central bank HQ

Ghana's central bank held its main policy rate unchanged at 19 percent on Wednesday as expected, following a 100 basis point rise in July that was designed to halt a slide in the cedi <GHS=> currency.
Central bank governor Henry Kofi Wampah said the decision to hold reflected a rise in foreign exchange liquidity following recent dollar debt sales. He said inflation remained a concern, however, and was likely to end 2014 above the bank's 13 percent comfort zone.
The West African nation, which produces gold, cocoa and oil, issued a $1 billion Eurobond last week and secured a $1.7 billion loan for cocoa purchases, drawing dollars into the market that should help steady the cedi.
"The expected inflows from the Eurobond and the cocoa syndicated loan will provide additional inflows," Wampah told a news conference.
"Also, the government’s fiscal consolidation efforts are expected to be strengthened under the IMF programme which will also provide additional balance of payments support."
Ghana opened talks with the International Monetary Fund on Tuesday, hoping for financial assistance to restore fiscal balance in the face of fiscal problems.
These include inflation at 15.9 percent, a currency that has fallen sharply this year and a stubborn budget deficit that has stayed above 10 percent of gross domestic product for years.]
Twelve of 14 economists polled by Reuters had said they expected the bank's Monetary Policy Committee to hold on Wednesday, although two predicted a further 100-basis-point hike in November given persistently high inflation.
"This (rate hold) is expected, especially with the noticeable recovery of the cedi this week, which is a major cause of the country's inflationary pressures," said economist Sampson Akligoh.
Ghana became a model for West Africa in recent years because of its political stability and strong record of economic growth, but it faces a long-term energy deficit that was exacerbated last year by a cut in the supply of gas from Nigeria.
A senior official at the West African Gas Pipeline Co (WAPCo) in Ghana said on Wednesday gas supplies through the pipeline, which serves, Togo, Benin and Ghana, had been cut due to a strike in Nigeria.
Wampah said the cut was "not good news" and could hurt the economy if prolonged. The government revised its 2014 growth target down in July to 7.1 percent, from 8 percent previously.
Reserves stood at the end of August at $4.2 billion or 2.4 months of import cover and inflows would further boost this figure to the government's target of three months' import cover by the end of the year, he said.
The government is in a stronger position than when it announced the IMF talks in August, according to economists.