Policy rate rises by 150bps; now 29.5%
The Central Bank has increased its monetary policy rate by 150 basis points (1.5%).
On the back of the increment, the Bank of Ghana’s monetary policy rate rises to 29.5% from the previous rate of 28%.
Cumulatively, the policy rate hikes by the Central Bank since November last year, comes to some 1,400 basis points (14%).
The hike in the policy rate is despite a continuous decline in inflation rate to the current 52.8% in February 2023.
Given the hike in policy rate, interest rates on loans to the private sector is expected to increase, further making costs of production by businesses in the country more expensive.
The hike in the policy rate, the Governor of the Bank of Ghana, Dr Ernest Addison averred, was due to the relatively high inflation rate compared to the Bank’s medium-term target.
Announcing the new policy rate, the Governor of the Central Bank, Dr Ernest Addison said, “Headline inflation has declined marginally for two consecutive months, but continues to remain relatively high compared to the medium-term target of 8±2 percent. To place the economy firmly on the path of stability and reinforce the pace
of disinflation, it is important that the monetary policy stance be tuned further to re-anchor inflation expectations towards the medium-term target. Given these considerations, the MPC decided to increase the Monetary Policy Rate by 150 basis points to 29.5 percent.”
