Monetary policy rate reviewed to 14.5%

Inflation, among other factors contributed to this new decision

The first MPC meeting for 2022 is scheduled for January 25 to January 28,

The Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) has increased the policy rate by 100 basis points from 13.5% to 14.5%.

This comes after the Committee of the Bank of Ghana held its 103rd meeting from Tuesday, November 16, to Friday, November 19, 2021 to review economic developments of the country.

The policy rate determines the rate at which the central bank lends to commercial banks. It also influences the interest rate on loans.

It would be recalled that in May 2021, the central bank lowered the policy rate from 14.5% to 13.5percent.

It was the first time in the year that the central bank had lowered the policy rate.

The Bank of Ghana Governor, Dr Ernest Addison, attributed the review of the policy rate to the rise in inflation.

He said, “Global price pressures, on the other hand, have intensified with headline inflation rising above targets in several advanced and emerging market economies. The rise in inflation broadly reflects rising energy prices, resurgence in global demand, and supply chain constraints. Although the rise in inflation was deemed transitory in the first half of 2021, it is becoming embedded, raising policy uncertainties in the outlook.”

“In Emerging Market and Developing Economies (EMDEs), increased commodity and food prices, supply bottlenecks and pass-through to exchange rate depreciation resulted in rising inflation. While some EMDEs have raised their policy rates to contain inflationary pressures, others have adopted a wait-and-see attitude to further observe the price dynamics…Given these considerations, the Committee therefore decided to raise the policy rate by 100 basis points to 14.5 percent,” he stated.

The first Monetary Policy Committee (MPC) meeting for 2022 is scheduled for January 25 to January 28, 2022.

The meeting will conclude on Monday, January 31, 2022 with the announcement of the policy decision.