Ghana Monetary Policy

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Ghana: Bank of Ghana hikes policy rate in a surprise move

September 15, 2015

At its 14 August monetary policy meeting, the Bank of Ghana (BOG) decided to hike its monetary policy rate by 100 basis points from 24.00% to 25.0%. As a result, the policy rate now stands at its highest level on record. The decision came as a surprise to the markets as they had expected the Bank to keep the policy rate unchanged at 24.00%. This is the second meeting since November of last year in which the Bank has decided to increase the policy rate in an effort to fight high inflation.

On the domestic front, the Monetary Policy Committee (MPC) pointed out that challenges in the energy sector along with fiscal consolidation and the high cost of doing business in the country continue to drag on GDP growth. For the eight months up to September, total revenue exceeded the target while expenditure was broadly on target. The Bank added that external developments pose a significant risk to the domestic economy. The Committee was particularly concerned about the elevated volatility in the financial market and lower commodity prices, as well as the impact of the Fed’s expected tightening of its monetary policy.

In August, inflation inched down from 17.9% to 17.3%. Despite the slowdown in inflation, the Bank considers inflationary pressures to be quite high, mainly reflecting exchange rate volatility and a significant increase in utility tariffs. Looking forward, the Bank commented that, “in the coming months, however, the currency volatility is expected to moderate due to a tight monetary policy stance and the anticipated inflows from the Eurobond issue and the syndicated pre-export finance facility for cocoa.”

FocusEconomics Consensus Forecast panelists expect the monetary policy rate to end this year at 20.25%. For 2016, panelists project that the monetary policy rate will end the year at 18.33%.


Author:, Senior Economist

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Ghana Monetary Policy Chart


Ghana Monetary Policy August 2015 0

Note: Monetary Policy Rate in %.
Source: Bank of Ghana (BOG).


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