The Bank of Ghana (BoG) has increased the policy rate by 200 basis points to 19 percent after the Monetary Policy Committee (MPC) meeting.
The Central Bank attributed its decision to inflation making it the second time in 12 months for such a move.
Addressing the media Monday at the BoG’s Conference room in Accra, Governor of the BoG, Dr. Ernest Addison noted that “inflation expectations by consumers, businesses, and the banking sector have heightened.”
“The risk to the inflation outlook is on the upside and emanates from the availability of inputs for food production, imported inflation, continued upward adjustments and ex-pump petroleum prices and transportation costs, possible increases in utility tariffs, and potential wage pressures. The second-round effect of these administered price adjustments would further amplify inflation pressures on the outlook,” Mr. Addison explained.He continued: “These considerations show that with the strong rebound in growth and the closing of the negative output gap, the balance of risk is clearly on inflation.
“The MPC took the view that it needed to decisively address the current inflationary pressures to re-anchor expectations and help foster macroeconomic stability. On the basis of the above assessment, the Committee decided to raise the policy rate by 200 basis points to 19%.”