MPC to announce a new policy rate today, will it be 29% or more?
The Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) headed by the Governor, Dr Ernest Addison, will be expected to announce a new monetary policy rate (MPR) today, Monday, January 30, 2023.
The Committee, given the recent developments in the economy over the past two months will be expected to hike the policy rate up from the current 27%.
The expected increment in the policy rate is particularly with regards to the surge in headline inflation to 54.1% in December 2023.
Despite the general anticipation that the MPC will hike the policy rate, it is likely that the MPC might decide to maintain the current policy rate of 27%.
But, unlikely to happen with regards to the announcement of the new policy rate, is a reduction in the rate given the positive relationship between inflation and the monetary policy rate.
A hike in the policy rate today, will mean higher interest rates on loans from banks for the private sector.
For the government, it will mean increasing interest rates on its treasury bills to attract investors to the short term securities, thereby costing the government more in the issuance of its short term debt instruments.
The modest projection is that the MPC is likely to hike the policy rate by 200 basis points to peg the new policy rate at 29%, but could it be more given the more than 380 basis points (3.8%) increment in inflation rate from November (50.3%) to December (54.1%).
Stay tuned to norvanreports as we bring you updates on today’s MPC press briefing…
