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Ghana’s policy rate increased from 14.5% to 17%

The Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) on Monday, March 21, 2022, increased the policy rate to 17% from 14.5%.

Finance Minister, Ken Ofori-Atta and Bank of Ghana governor, Dr. Ernest Addison

The increase is by 250 basis points. It is also the first time the central bank has increased the rate since November 2021.

The latest development from the BoG is based on hikes in oil and food prices.

Speaking at the 105th MPC press briefing in Accra, the Governor of the Bank of Ghana, Dr Ernest Addison said the move is expected to control the rising inflation and check the rapid depreciation of the cedi.

On January 31, the BoG maintained the policy rate at 14.5% citing sharp increases in energy prices, rising demand pressures, and persistent supply chain disruptions.

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Headline inflation has risen sharply to 15.7 percent in February 2022 and both headline and core inflation are significantly above the upper limit of the medium-term target band. The uncertainty surrounding price development and its impact on economic activity is weighing down business and consumer confidence… Under these circumstances, the committee has decided to increase the policy rate by 250 basis points to 17 percent,” Dr. Addison noted.

He also outlined steps being taken in the banking sector to check liquidity in the system.

The monetary policy rate, which is of keen interest to businesses, signals the rate at which the Central Bank will lend to commercial banks.

It also subsequently influences average lending rates on loans to individuals and businesses.

Meanwhile, the government is set to review all of its flagship policies, Information Minister Kojo Oppong Nkrumah has said.

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All the 16 flagship programs are up to be looked at. The President has directed that the flagship programs should be protected and fully implemented to ensure that the impact is achieved. However, he wants it done within the constraints of item number 2 which is the fiscal framework we are working with. If based on the caps that we are working with we will have to rescope a particular flagship program, we will do it and see how much we can achieve,” the Ofoase-Ayirebi MP told Accra-based Citi FM Monday.

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