Ghana Monetary Policy March 2022


Ghana: Central Bank anticipates meeting, hikes policy rate by 250 basis points

March 21, 2022

At an unexpected meeting on 21 March—the meeting was originally scheduled for 23–25 March—the Monetary Policy Committee of the Bank of Ghana (BoG) decided to hike its policy rate by 250 basis points to 17.00%. The move followed a decision to keep the rate stable in late January.

The hike responded to mounting external headwinds, as the Russian invasion of Ukraine drove prices up in commodity markets and both developed and emerging economies tightened their policies. Meanwhile, February inflation reached 15.7%, up from 13.9% in January, while the cedi has suffered from sustained and substantial depreciation from late January due to harsher global financing conditions and limited government access to international markets.

In its communiqué, the Bank noted that fiscal reforms, together with the rate hike, should be enough to calm markets and soften inflation. Given that the bank still sees inflation reaching the target in the medium term—which is 8.0% with a symmetric band of 2.0%—the forward guidance is interpreted as neutral.

On the outlook, Bojosi Morule and Andrew Matheny, analysts at Goldman Sachs, see further hikes ahead:

“Given the exacerbation of external and fiscal pressures and strong domestic and global inflationary pressures, our baseline policy rate forecast was for the Bank of Ghana to hike by 250 basis points over the course of the year, bringing the policy rate to +17.0% by end-year. […] We now see risks of further hikes as tightening financial conditions for EM countries due to the Russia/Ukraine conflict add to the already meaningful depreciation pressure on the Cedi (the Cedi has depreciated by 18% year-to-date vs. the USD mostly prior to the rise of geopolitical risk).”

The next meeting is scheduled for 18–20 May, with the decision to be announced on 23 May.

Given the proximity to our publication date, the FocusEconomics panel has not had sufficient time to adapt to the latest decision. An update to forecasts will be provided on 19 April.

Author:, Junior Economist

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Ghana Monetary Policy Chart

Ghana Monetary Policy March 2022

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

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