He explained that the assessment and deliberations that informed the decision included the outlook for the global economy which has improved slightly since the last MPC meeting. He added that fears of global recession have subsided on the back of stronger-than-expected global demand in the fourth quarter of 2022.
Governor Saidy stated that the International Monetary Fund (IMF) in its January 2023 world economic outlook forecasted global growth to moderate to 2.9% in 2023 from 2.7% in October 2022, a 0.2 percentage point upward revision.
“Global inflation appeared to have peaked in the fourth quarter of 2022 and is expected to moderate, supported by declining energy and non-fuel commodity prices as well as monetary policy tightening. The IMF forecast global inflation to decelerate to 6.6% in 2023, from 8.8% in 2022.”
He continued that the Food and Agriculture Organisation (FAO) food price index declined for the 10th consecutive month in January 2023. Mr. Saidy further reiterated that the index declined by 0.8% from December 2022 to January 2023 and 17.9% below the peak in March 2022.
The international prices of rice, he said, continue to rise, adding that the FAO rice price index increased by 6.2% from December 2022 to January 2023, reflecting tighter supply amid strong demand and exchange rate movements.
After a long economic analysis, the committee to increase the policy rate by 1.0% to 14%; maintain the required reserve at 13%; maintain the interest rate on the standing deposit facility at 3%; and standing lending facility will increase to 15% (Monetary Policy Rate plus 1% point).
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