Bank of Ghana’s MPC members vote to hike interest rate to highest level of 22%
During an emergency Monetary Policy Committee (MPC) meeting held on Wednesday, August 17, the Bank of Ghana’s MPC members voted to hike the country’s monetary policy rate to 22%.
This represents a 300 basis point increase from a 19% policy rate just three weeks ago. It is also the highest ever rate hike on record for the West African country.
A press release made available by the apex bank at the end of the meeting explained that the MPC members agreed on the rate hike in consideration of the many challenges facing the Ghanaian economy.
“Under the circumstances, and considering the risks to the inflation outlook, the Committee decided on a 300 basis points increase in the Monetary Policy Rate to 22 per cent,” part of the statement said.
As you may know, the West African country has been grappling with macroeconomic challenges ranging from soaring inflation to depreciation of the cedi to budget deficits. Ghana has also been having challenges sourcing funds through the international capital market, ever since its sovereign credit rating was downgraded by Fitch and Moody’s earlier this year.
This represents a 300 basis point increase from a 19% policy rate just three weeks ago. It is also the highest ever rate hike on record for the West African country.
A press release made available by the apex bank at the end of the meeting explained that the MPC members agreed on the rate hike in consideration of the many challenges facing the Ghanaian economy.
“Under the circumstances, and considering the risks to the inflation outlook, the Committee decided on a 300 basis points increase in the Monetary Policy Rate to 22 per cent,” part of the statement said.
As you may know, the West African country has been grappling with macroeconomic challenges ranging from soaring inflation to depreciation of the cedi to budget deficits. Ghana has also been having challenges sourcing funds through the international capital market, ever since its sovereign credit rating was downgraded by Fitch and Moody’s earlier this year.
In the meantime, Ghana’s MPC members have expressed confidence that the expected $3 billion loan from the International Monetary Fund (IMF) would help the country take care of its immediate financing problems.
“Whilst addressing the immediate financing problems, the ongoing policy discussions with the IMF are expected to address the underlying macroeconomic challenges, restore fiscal and debt sustainability, and provide a sustainable balance of payments cushion,” the statement said.
Other measures taken by the Bank of Ghana towards addressing the economic challenges facing the country include:
- To raise the primary reserve requirement of banks from 12% to 15%. The measure would be implemented in phases starting from September 1.
- The apex bank also plans to boost the supply of foreign exchange to the Ghanaian economy through collaboration with mining firms, oil companies and other exporters.
