The Monetary Policy Committee(MPC) of the Bank of Ghana has increased its policy rate by 50 basis points to 30%.
This is a 0.5% increment from the previous 29.5% held in May 2023.
This increment is targeted at stemming the rising inflation even though disinflation has been forecast to resume in July 2023, as food prices remain a significant source of price pressure.
Since November 2021, the Central Bank’s key lending rate has gone up by 15.5%.
Despite the increase in the policy rate, lending rates are not expected to go up. This is because the cost of credit has been trending downwards contrary to the expected hike.
With a cumulative increase of 250 basis points (bps), the policy rate reached a record high of 29.5 percent in Q1-2023. The aim was to reinforce disinflation and anchor inflation expectations.
In the last three meetings in 2023, the MPC decided to hike the policy rate twice, in the January and March sessions, while maintaining the rate in May 2023.
Hitherto the increment, some market analysts held mixed opinions on the committee’s possible stance. Some anticipated a cautious hike in the policy rate while others expected it to be held at 29.50% to support growth and general economic activity.