To combat the skyrocketing level of inflation, Ghana’s Central Bank raised key interest rates by 30%. This hike represents a 0.5% rise.
The increase was declared at the conclusion of the apex bank’s monetary policy meeting on Monday. The governor of Ghana’s central bank, Ernest Addison, stated on Monday that the most recent hike in interest rates was necessary to keep a disinflation trend from veering off course.
The move to increase the country’s interest rates raises the cost of borrowing money and is designed to lower consumer spending. The West African gold coast has been battling an economic crisis brought on by a cost-of-living crisis, massive public debt, and an inflation rate that is presently above 42%.
The World Bank said that the growing cost of living, which is accompanied by a decline in buying power and a rise in food prices, will cause an additional 850,000 Ghanaians to fall into poverty by the end of 2022.
Financial analyst, Richmond Frimpong, while speaking to BBC, said a hike in rates is the best way to go in the midst of the crisis, noting that the move is an effective way of tackling some of the country’s current economic crises.
The governor’s remarks on the need for fiscal consolidation come as Ghana’s Finance Minister, Ken Ofori-Atta, prepares to give his mid-term budget review to parliament on Tuesday. The governor stated that the central bank will closely watch inflation figures in the coming months and adjust as appropriate.
Ghana’s central bank increased its main interest rate by 50 basis points to 30.0% while urging stricter fiscal policy to assist reduce the country’s persistently high inflation.
