PMI Report : Deteriorating Business Conditions May Soften BoG’s Hawkish Stance

Ghana’s Purchasing Managers Index (PMI) for August 2022 showed a contraction in business activity in the private sector as it declined to 45.9%, as against 48.8% in July 2022.

This may soften the Bank of Ghana’s hawkish stance to curb inflation.

According to the Weekly Fixed Income Update by Databank Research, the deteriorated business conditions come on the back of subdued consumer demand, which was negatively affected by the heightened price pressures.

Overall, it said, input price inflation accelerated to an 8-year high owing to unfavourable foreign exchange rate movements and increasing fuel prices, propelling output prices to record levels.

“We expect the BoG to soften its hawkish stance on policy rates with the hardening business conditions”.

Government to raise ¢1.7bn via T-bills

This week the Treasury will seek to raise ¢1.717 billion across the 91-day to 364-day tenors. The uptake will be used to refinance total maturities worth ¢1.598 billion.

Government accepts 2.2bn from T-bills sale

The Treasury allotted ¢2.226 billion out of the total bids of ¢2.288 billion, translating into a bid-to-cover ratio of 1.03x.

The government thus continued to build buffers by taking up excess requests, exceeding its target by 32.37% and its T-bill refinancing obligation by 42.03%.

The 91-day and 182-day tenors cleared at 29.48% and 31.05%, respectively. The T-bill curve remains humped with upward corrections expected for the 364-day in the upcoming auction.