Interest Rate in Ghana
Ghana - Interest Rate
Bank of Ghana unexpectedly cuts the key rate to 16.00% in January
At its three-day meeting concluding on 25 January, the Monetary Policy Committee (MPC) of the Bank of Ghana (BOG) cut its policy rate by 100 basis points to a five-year low of 16.00%. The decision followed three consecutive meetings with no change to the policy rate and caught market analysts by surprise due to still-high inflation and elevated downside risks to the cedi.
The Bank’s decision came against the backdrop of moderating inflationary pressures. Aside from the uptick to 9.4% in December (November: 9.3%), inflation has been steadily declining since 2016 thanks to lower non-food inflation, which has created room for policy easing. Furthermore, with inflation forecasted to remain within the Central Bank’s medium-term target range of 8.0% plus or minus 2.0 percentage points and risks to the inflation outlook well under control, the Bank hinted at lowering the inflation target rate at some point ahead. Ernest Addison, the Bank’s governor, stated that lowering the inflation target is required to contain price-growth expectations and maintain the competitiveness of the Ghanaian economy in the medium-term.
In its communiqué, the Bank also noted the sustained weakness of the cedi, which lost ground in 2018 due to a stronger U.S. dollar and elevated risk aversion to emerging market economies amid ongoing global trade conflicts. In addition, the cedi slipped against the U.S. dollar immediately following the announced rate cut, pushing it close to an all-time low on 28 January. Looking ahead, further cuts to the key policy rate are likely to be determined by both the ability of the cedi to keep its ground against the U.S. dollar, as well as by the trajectory of inflation in the first quarter of 2019.
The next MPC meeting is scheduled for 20–22 March, with the decision set to be released on 25 March.
FocusEconomics panelists are continuing to evaluate the recent policy announcement. The panel currently expects the policy rate to end this year at 15.70%, before moderating to 14.17% by the end of 2020.
Ghana - Interest Rate Data
|Policy Interest Rate (%)||16.00||21.00||26.00||25.50||20.00|
5 years of economic forecasts for more than 30 economic indicators.
Ghana Interest Rate Chart
Source: Bank of Ghana
|Exchange Rate||5.64||0.0 %||Mar 11|
|Stock Market||0.1||0.0 %||Mar 11|
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March 18, 2019
The Ghanaian cedi plunged after the Bank of Ghana (BOG) unexpectedly slashed its key policy rate by 100 basis points on 28 January to a five-year low of 16.00% and signaled that further policy easing may be underway.
March 14, 2019
Consumer prices rose 1.0% in monthly terms in February, unchanged from January’s reading.
March 5, 2019
The Stanbic IBTC Bank Ghana Purchasing Managers’ Index (PMI) ticked down from 51.6 points in January to 51.3 February.
February 13, 2019
Consumer prices rose 1.0% in monthly terms in January, up slightly from December’s 1.1% increase.
February 5, 2019
The Stanbic IBTC Bank Ghana Purchasing Managers’ Index (PMI) fell from a six-month high of 52.3 points in December to 51.6 in January.