The policy rate is the rate at which the BoG lends to commercial banks in the country and serves as the benchmark interest rate for onward lending to businesses.
Bank of Ghana raises policy rate to 19%
The Bank of Ghana (BoG) has increased the Monetary Policy Rate (MPR) by 200 basis points to 19 percent from 17 percent over concerns of rising inflation and unfavourable global economic conditions.
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Dr. Ernest Addison, the Governor of the Central Bank, announced the new policy rate at the Monetary Policy Committee (MPC) meeting on Monday, May 23, 2022, and said the rising inflation is a surprise to his team but will take a major decision to address the issue.
He said "It's an issue which in a sense is baffling to all of us. A year ago, inflation in Ghana was near single digit, particularly we were at 7.5% and then we find ourselves a year later in high double digits.
"It's a very complicated environment, as you yourself are aware we have come out of COVID-19. But Ghana, fortunately, was able to weather the impact of COVID well without recording high-interest rates."
It will be recalled that on May 18, this year, the Institute of Economic Affairs (IEA) projected a 200 basis points increase in the monetary policy rate to 19 percent.
The think tank institute believes the increment will help narrow the gap with rising inflation and also ease to some extent the risk of foreign currency outflows.
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