BoG hikes policy rate by 250 basis points, stands at 27%

The Bank of Ghana has hiked the monetary policy rate by 250 basis points from 24.5 percent to 27 percent.

Chairman of the Monetary Policy Committee and BoG Governor, Dr. Ernest Addison said the decision is expected to anchor inflation expectations in the country with the figure standing at 40.4 percent in October 2022.

The move by the central bank is expected to significantly increase the cost of lending and the cost of doing business in the country.

Dr. Ernest Addison speaking at a press conference in Accra said the forecast for inflation is expected to peak until the first quarter of 2023.

"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," Dr Addison said.

He continued, "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."

"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," the BoG Governor noted.

Meanwhile, Ghana is hoping to secure an IMF-supported programme by the end of this year in order to restore macroeconomic stability, among others.

MA