Policy rate hits 27%; cost of borrowing to go up further
Ghana’s Central Bank has increased the benchmark interest rate as the significant upside risks to inflation outlook remain.
To continue to contain inflationary pressures, the Monetary Policy Committee on Monday, November 28, 2022 decided to increase the policy rate by 250 basis points to 27.0 percent.
This means cost of borrowing is expected to go up further.
The inflation forecast shows that in the outlook, inflation will likely peak in the first quarter of 2023 and settle at around 25% 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”, Dr. Ernest Addison, Governor of the Bank of Ghana stated.