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In order to combat rising inflation and the ongoing depreciation of the local currency, Ghana’s central bank stated Monday that it would raise its benchmark policy rate by 250 basis points, to 27 percent.
The choice was made public during a press conference held by Bank of Ghana Governor Ernest Addison following the 109th Monetary Policy Committee (MPC) meeting.
This choice followed a similar rise on October 7 that raised the rate to 24.5 percent while inflation and currency rate depreciation remained unstable.
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The MPC believes that there are still substantial upside risks to the inflation outlook. The committee voted to raise the policy rate by 250 basis points to 27 percent in order to stabilize inflation expectations, according to Addison.
According to Addison, as monthly inflation declined from a height of 5.1 percent to 1.9 percent, the recent hikes in policy rates had helped to slow the rate of monthly price increases.
He claimed that this trend was reversible in September and October as a result of further shocks from rising ex-pump oil prices, changes to utility tariffs, and hikes in transportation fares.
In October, the inflation rate was 40.4 percent, according to the governor, who also noted “strong underlying price pressures and upside risks to the inflation outlook.” Enditem.
