BoG tightens monetary policy rate; pushes it to 30%

The Bank of Ghana (BoG) has tightened the monetary policy rate by 50 basis points, pushing it up to 30 percent.

This was determined following the apex bank’s review of economic trends in the last two months.

This means the cost of borrowing at banks has risen by 0.5 percent from the previous rate of 29.5 percent held by the Central Bank in May 2023.

Analysts predicted that the rate will climb marginally due to inflationary pressures.

Dr. Ernest Addison, Governor of the BoG, in his address after the 113th Monetary Policy Committee meeting, ascribed the Central Bank’s decision to raise the rate to rise in inflation.

“…Enhancing revenue mobilisation and aligning expenditures with revenue inflows will be key in forging ahead with fiscal cash elevation efforts to help foster credibility, restore confidence and support the disinflation process and anchor stability. Implementation of the IMF-supported extended credit facility programme for the first six months in 2023 is broadly in line with the performance targets of June 2023. While the programme envisaged a draw-down of the BoG of close to $100 million, the BoG build reserves in excess of $1 billion.

“Regarding the monetary policy consultation clause, inflation as of June 2023 is within the target band, after declining consistently between January to April. Headline inflation increased in May and June on account of a variety of factors including higher food prices, implementation of new tax measures and utility tariff adjustment,” he stated.