• Login
NORVANREPORTS.COM |  Business News, Insurance, Taxation, Oil & Gas, Maritime News, Ghana, Africa, World
  • Home
  • News
    • General
    • Political
  • Economy
  • Business
    • Agribusiness
    • Aviation
    • Banking & Finance
    • Energy
    • Insurance
    • Manufacturing
    • Markets
    • Maritime
    • Real Estate
    • Tourism
    • Transport
  • Technology
    • Telecom
    • Cyber-security
    • Cryptocurrency
    • Tech-guide
    • Social Media
  • Features
    • Interviews
    • Opinions
  • Reports
    • Banking/Finance
    • Insurance
    • Budgets
    • GDP
    • Inflation
    • Central Bank
    • Sec/Gse
  • Lifestyle
    • Sports
    • Entertainment
    • Travel
    • Environment
    • Weather
  • NRTV
    • Audio
    • Video
No Result
View All Result
No Result
View All Result
NORVANREPORTS.COM |  Business News, Insurance, Taxation, Oil & Gas, Maritime News, Ghana, Africa, World
No Result
View All Result
Home Economy

Investors react to recent spike in inflation

4 years ago
in Economy, highlights, Home, home-news, latest News
2 min read
0 0
0
90
VIEWS
Share on FacebookShare on TwitterShare on Linkedin

Investors react to recent spike in inflation

The recent hike in consumer inflation to 12.2 percent has resulted in some reaction from investors with the demand for higher interest rate on government securities on the lower end of the yield curve to compensate for the current inflation risk.

Through the first half of 2021, inflation declined to 7.5 percent in May-2021 which prompted the further reduction of the policy rate to 13.5 percent in May -2021 by the Bank of Ghana, which interest rates accordingly followed resulting in a year-to-date change of 11.23 percent decrease for the 91-day Treasury bills and decline of 6.49 percent and 2.54 percent for the 182-day and 364-day Treasury bills respectively.

This week yields on the 91-day Treasury bill increased to 12.51 percent from 12.47 percent, while yields on the 182-day and 364-day T-bills also inched upward marginally – from 13.19 percent to 13.20 percent and 16.36 percent to 16.57 percent, respectively.

The inflation curve since mid year has seen changes, with a steep climb to the current level of 12.2 percent, which resulted in a tightening of monetary policy by the central bank, reversing the 100 basis points (bps) cut in May and pushing the policy rate back up to 14.5 percent.

Senior Investment Analyst at OctaneDC Limited, Kwadwo Acheampong, in an interview with B&FT noted that,  investors’ response will be very indicative; however, the slight jump in yields is likely going to be short-lived.

“It’s very likely market interest rates could go up slightly. However, fuel prices have begun going down generally; and if this continues it is likely to pull down non-food inflation, and any rise in interest rates fuelled by inflation would be short-lived. Food inflation could keep the inflation rate high still,” the senior analyst said.

RelatedPosts

Chamber of Mines Warns Mining Act Reforms Could Weaken Ghana’s Investment Appeal

Gold Price Hits Record High as Investors Seek Safety

Nigeria: Forex Traders Say Chinese Traders Now Collecting Naira Instead of Dollars

“A significant response by investors demanding an increase in rates on the market bids would be very indicative. We believe a slight jump is likely, but this may be short-lived if fuel prices continue to descend this month,” he emphasised.

Describing the impact of inflation spikes, Senior Economist with Databank, Courage Kingsley Martey, highlighted how this serves as a disincentive for investment – given the current period of the year.

“The current level of 12.2 percent is a further disincentive for investment; and at this time of the year when people would normally spend on festivities, higher prices would require higher cash balances to fund consumption spending…which would be a disincentive for investment,” he said.

Mr. Martey added that: “Furthermore, an investor who holds a 91-day Treasury bill and earns the prevailing nominal yield of 12.4 percent per annum faces the risk of this return being wiped out by inflation of over 12 percent. This discourages investment, unless there’s an upward adjustment in the nominal yields to compensate for the inflation risk.

“But we should also note that higher interest rates would impose more cost on government for deficit financing through domestic borrowing. Higher interest rates would also increase the cost of capital for private sector business expansion and growth.”

Tags: Bank of Ghana (BoG)COVID-19 pandemicghanaInvestors react to recent spike in inflation
No Result
View All Result

Highlights

Chinese Firm Faces $420 Million Zambia Mine Spill Damages Claims

60% of Africans Don’t Believe Democracy is Working in Their Interests – How Parliaments Can Fix The Problem

Banking Sector the Most Robust and Advanced Sector in Fight Against Money Laundering – Report

West Africa: Ghana Flagged as Target for Illicit Financial Flows in Latest National Risk Assessment

Central Bank Raises GH¢2.34bn in Short-Term Bill Sale at Nearly 25% Yield

Summer 2025 Transfer Window: Record-Breaking Moves Reshape European Football

Trending

Business

Chamber of Mines Warns Mining Act Reforms Could Weaken Ghana’s Investment Appeal

September 2, 2025

Chamber of Mines Warns Mining Act Reforms Could Weaken Ghana’s Investment Appeal Ghana’s mining sector, long the...

Gold Price Hits Record High as Investors Seek Safety

September 2, 2025

Nigeria: Forex Traders Say Chinese Traders Now Collecting Naira Instead of Dollars

September 2, 2025

Chinese Firm Faces $420 Million Zambia Mine Spill Damages Claims

September 2, 2025

60% of Africans Don’t Believe Democracy is Working in Their Interests – How Parliaments Can Fix The Problem

September 2, 2025

Who we are?

NORVANREPORTS.COM |  Business News, Insurance, Taxation, Oil & Gas, Maritime News, Ghana, Africa, World

NorvanReports is a unique data, business, and financial portal aimed at providing accurate, impartial reporting of business news on Ghana, Africa, and around the world from a truly independent reporting and analysis point of view.

© 2020 Norvanreports – credible news platform.
L: Hse #4 3rd Okle Link, Baatsonaa – Accra-Ghana T:+233-(0)26 451 1013 E: news@norvanreports.com info@norvanreports.com
All rights reserved we display professionalism at all stages of publications

No Result
View All Result
  • Home
  • Business
    • Agribusiness
    • Aviation
    • Energy
    • Insurance
    • Manufacturing
    • Real Estate
    • Maritime
    • Tourism
    • Transport
    • Banking & Finance
    • Trade
    • Markets
  • Economy
  • Reports
  • Technology
    • Cryptocurrency
    • Cyber-security
    • Social Media
    • Tech-guide
    • Telecom
  • Features
    • Interviews
    • Opinions
  • Lifestyle
    • Entertainment
    • Sports
    • Travel
    • Environment
    • Weather
  • NRTV
    • Audio
    • Video

Welcome Back!

Login to your account below

Forgotten Password?

Create New Account!

Fill the forms bellow to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In
NORVANREPORTS.COM | Business News, Insurance, Taxation, Oil & Gas, Maritime News, Ghana, Africa, World
This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.
We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it.