A boat on the beach in Ghana

Ghana Monetary Policy March 2022

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

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.

Free sample report

Access essential information in the shortest time possible. FocusEconomics provide hundreds of consensus forecast reports from the most reputable economic research authorities in the world.
Close Left Media Arrows Left Media Circles Right Media Arrows Right Media Circles Arrow Quote Wave Address Email Telephone Man in front of screen with line chart Document with bar chart and magnifying glass Application window with bar chart Target with arrow Line Chart Stopwatch Globe with arrows Document with bar chart in front of screen Bar chart with magnifying glass and dollar sign Lightbulb Document with bookmark Laptop with download icon Calendar Icon Nav Menu Arrow Arrow Right Long Icon Arrow Right Icon Chevron Right Icon Chevron Left Icon Briefcase Icon Linkedin In Icon Full Linkedin Icon Filter Facebook Linkedin Twitter Pinterest