Monetary policy rate increased to 27%

The Committee cited heightened economic and policy uncertainties, inflationary pressures, and weakening of the Ghana cedi against the US dollar as among the reasons for the increment.

The Governor of the Bank of Ghana, Dr. Ernest Addison, addressing the press said the increase forms part of efforts to address current inflationary pressures.

He said "Continued vigilance to the evolution of these potential price pressures in the outlook will be key. The Committee is of the view that significant upside risks to the inflation outlook remain. To continue to anchor inflation expectations, the Committee, therefore, decided to increase the policy rate by 250 basis points to 27.0 percent."

On the fiscal situation, the BoG said while expenditures had been broadly on target, revenue performance had been below expectations, complicating fiscal policy implementation.

He said financing of the budget so far had predominantly been from the banking sector with the central bank absorbing a larger share.

Ahead of the announcement of the policy rate by the central bank, the Institute of Economic Affairs (IEA) stated that the forecasted hike is due to the widening gap between inflation and the policy rate which has compelled commercial banks to seek funds from BoG at much cheaper rates while lending to government at higher rates.