The Monetary Policy Committee of the Bank of Ghana has announced a hike in the policy rate by 150 basis points to 29.5 percent from an earlier 28 percent announced in January this year.
The decision comes after the Central Bank held its second meeting for 2023 to review economic developments in the country.
Governor of the Bank, Dr. Ernest Addisonexplained that the hike is due to rising inflationary shocks which are expected to persist as Ghana awaits an IMF-supported programme.
“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,” Dr. Addison noted.
He continued, “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.”
He made this known at a press conference held on Monday, March 27, 2023.
Dr. Addison further said that as part of additional measures in line with the policy rate hike, the Committee has decided to reset the Cash Reserve Ratio on domestic currency deposits for banks from 12 percent to 14 percent, effective April 13, 2023.
“In addition, the Bank will step up liquidity management operations to address excess liquidity conditions in the market. The Committee will continue to monitor developments in the banking sector and deploy other macroprudential tools to ensure financial stability,” the BoG Governor concluded.
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