Bank of Ghana increases monetary policy rate to 30% from 29%
The Bank of Ghana (BoG) has announced a tightening of its monetary policy, pushing the policy rate to 30 percent. The move is aimed at addressing rising inflation and stabilizing the country's currency, the Ghanaian cedi.
The decision was taken at a meeting of the Monetary Policy Committee (MPC), which is responsible for setting the policy rate. In a statement, the MPC noted that inflation had risen above the upper band of the target range, driven mainly by food and energy prices.
"The Committee observed that the risks to the inflation outlook have increased, and that the current stance of monetary policy is not consistent with the inflation target," the statement said.
The MPC also noted that the depreciation of the cedi had intensified in recent weeks, partly due to global factors such as the strengthening of the US dollar and rising oil prices. The central bank has been intervening in the foreign exchange market to support the cedi, but the MPC acknowledged that more needs to be done to stabilize the currency.
The tightening of monetary policy is expected to have an impact on borrowing costs in the country, as commercial banks are likely to increase their lending rates in response to the higher policy rate. This could in turn affect economic growth, as higher borrowing costs may discourage investment and consumer spending.
However, the BoG said it was necessary to take action to address inflation and stabilize the currency, and that it would continue to monitor economic developments and adjust its policy stance as necessary.
The move comes after the BoG raised the policy rate from 14.5 percent to 22 percent in May this year, in response to rising inflation and currency depreciation. The latest increase to 30 percent is the highest policy rate in Ghana since 2003.
The decision has been met with mixed reactions, with some analysts arguing that it was necessary to address inflation and stabilize the currency, while others expressed concern about the impact on borrowing costs and economic growth.
In any case, the BoG appears to be taking a proactive approach to managing the country's economy, and will likely continue to adjust its policy stance in response to changing economic conditions.
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