Ghana Monetary Policy


Ghana: In surprise move Bank of Ghana hikes policy rate to 22.0% in May

May 13, 2015

At its 13 May monetary policy meeting, the Bank of Ghana (BOG) decided to hike its monetary policy rate by 100 basis points from 21.0% to 22.0%. This was the first meeting since November 2014 in which the Bank decided to hike its policy rate in an effort to fight high inflation. As a result of the increase, the policy rate now stands at its highest level on record. The move came as a surprise to the markets as they had expected the BOG to stay put in this meeting.

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. Adding to that, fragile global financial conditions and volatile commodity prices pose considerable risks to both economic growth and inflation. Nevertheless, the MPC acknowledged that the government’s fiscal performance in Q1 was encouraging as the deficit level remained within targets.

In April, consumer prices rose 16.8% over the same month of last year. Looking forward, the Bank commented that inflation expectations remain elevated, mainly due to, “exchange rate pass-through, possible upward adjustment in energy and utility prices as well as cost push factors associated with the persisting energy sector challenges.”

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

Author:, Senior Economist

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Ghana Monetary Policy Chart

Ghana Monetary Policy May 2015 0

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

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