Bank of Ghana Unexpectedly hikes Policy Rate by 100 basis points to 26%

ACCRA, Ghana, Capital Markets in Africa — The Bank of Ghana (BoG) announced a hike in its benchmark policy rate from 25 per cent to 26 per cent following at the end of the 67th Monetary Policy Committee (MPC) meeting held on Friday 13 November 2015.

The central bank Governor, Dr Henry Kofi Wampah, told a media briefing on Monday 16 November that the inflation stood at 17.4 per cent in October, unchanged from September and up from 17.3 per cent in August, according to the inflation figure released by the Ghana Statistical Service on .

Dr. Wampah stated that this indicated some moderation in price movements over the past three months, supported by the BoG’s tight monetary policy stance, the appreciation of the Ghana cedi’s exchange rate in July as well as falling international crude oil prices. 

The governor stated that nevertheless these developments, the current level of inflation and the latest inflation expectations remained far above the medium-term target band of 8.0 per cent plus or minus two percentage points.

“Also, there are imminent upside risks to the inflation outlook such as worsening external financial conditions and the planned utility tariff adjustments which are now likely to be higher than anticipated during the last MPC,” he said.

Dr Wampah said on a year-to-date basis, the Ghana cedi had depreciated by 15.5 per cent as at October 2015, compared with 31.2 per cent in the corresponding period of 2014.

“Going forward, maintaining a tight monetary policy stance will reinforce the relative stability in the foreign exchange market and dampen risks related to the external financial conditions,” he said.

The governor said assessments of current economic conditions showed that although monetary policy remained tight, some additional tightening was required to re-anchor the displaced inflation expectations.