THE BANK of Ghana on Wednesday raised its policy rate by 300 basis points to 22 percent, its biggest hike in two decades and one percentage point more than what most market participants had expected.
This was after its Monetary Policy Committee (MPC) held an extraordinary meeting Wednesday to review recent developments in the economy and assess risks to the outlook.
According to the MPC, chaired by Dr. Ernest Addison, Governor, the committee took note of the increase in inflation in the month of July and heightened pressures in foreign exchange market and deliberated on the underlying drivers.
The policy rate is the rate at which the Central Bank lends to commercial banks.
With this upward adjustment, the cost of borrowing is expected to go up significantly, and consequently increase the cost of living and doing business.
The latest release issued by the Ghana Statistical Service (GSS) indicated that the country’s inflation rate had hiked to 31.7 per cent for the eleventh consecutive month from 29.8 percent in June 2022.
This was driven by both food and nonfood price pressures. Food inflation rose to 32.3 percent in July 2022 from 30.7 percent in June 2022. Similarly, non-food inflation increased to 31.3 percent from 29.1 percent in June 2022, contributing 55 percent to the rise in headline inflation in July 2022.
The above developments have translated into relatively strong underlying inflationary pressures, the BoG said, adding its core measure of inflation, defined to exclude energy and utility indices, increased to 30.2 percent in July 2022 from 28.4 percent in June.
On month-on-month basis, it said headline inflation rose by 3.1 percent in July 2022 compared with 3.0 percent in June 2022.
The increase in monthly inflation was underpinned by increases of 3.3 percent and 3.0 percent in food and non-food inflation respectively.
BY Jamila Akweley Okertchiri
SEND A STORY: Do you have a story for us or need a promotion / advertisement? Submit them via our email dannyboy744@gmail.com and via on +233 266777777
