The Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) has raised the policy rate by 250 basis points to 27%.
The policy rate indicates the interest rate at which the central bank lends to commercial banks in Ghana.
The decision was taken after the committee reviewed the current economic situation as October inflation hits 40.4%
Speaking at the 108th MPC press briefing in Accra on Monday (28 November), the Governor of the BoG, Dr Ernest Addison said the increment was as a result of heightened economic and policy uncertainties, inflationary pressures, and weakening of the cedi against the US dollar.
“The inflation forecast shows that in the outlook, inflation will likely peak in the first quarter of 2023 and settle at around 25 percent by the end of 2023. This forecast is conditioned on the continued maintenance of tight monetary policy stance and the deployment of tools to contain excess liquidity in the economy.
“There are however some risks to this forecast that would have to be monitored, including additional pressures from the proposed VAT increase, and exchange rate pressures. Continued vigilance to the evolution of these potential price pressures in the outlook will be key,” he said.
“The Committee is of the view that significant upside risks to the inflation outlook remain. To continue to anchor inflation expectations, the Committee therefore decided to increase the policy rate by 250 basis points to 27.0 percent,” Addison said.