Monetary Policy Rate Increased

The Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) has increased the policy rate to 28 per cent.

This was reached after the first Committee meeting was concluded last week.

According to the Governor of the Bank, Ernest Addison, the global economic outlook remains uncertain owing to broad-based and elevated inflation, policy tightening, worsening financing conditions, and lingering spillover effects of geopolitical tensions.

He said these headwinds are likely to persist through the first half of 2023, driving down confidence and weakening real household disposable incomes in advanced and emerging market economies.

Domestic growth is projected to moderate and remains below potential over the near term, based on the elevated inflationary levels, he said.

He also pointed out that there are projections that banks will be plunged into insolvency and liquidity challenges due to the yet-to-be-implemented Domestic Debt Exchange Programme (DDEP).

According to the Bank, central banks in advanced economies have signalled the need to maintain a tight monetary policy stance to contain inflationary pressures, however, at a measured pace.

Mr Addison, therefore, announced the need for an increase in the MPR by 100 basis points.

The increase in Policy rate is meant to boost savings and slow down money supply in the market and therefore fight inflation.

In the same way, this measure increases the cost of credit.

During the last MPC meeting in 2022, the Bank increased the Policy rate to 27% from 24.5%.

Source: opemsuo.com/Hajara Fuseini