BoG increases policy rate by 200 basis points to 19%, cost of credit to go up

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The Monetary Policy Committee of the Bank of Ghana has for the second consecutive time increased the Policy Rate – the rate at which it lends to commercial banks by 200 basis points to 19%.

This was announced by the Governor, Dr. Ernest Addison.  

The increase in the Central Bank’s monetary policy rate means cost of borrowing is expected to go up at least for the next two and half months.

Prior to the announcement of the Policy Rate, the Central Bank has indicated its intention to tame inflation in order to bring interest rates down and consequently lending rate.

The Governor said the rising inflation is a surprise to his team, but will take a major decision to address the issue.

“It’s an issue which in a sense is baffling to all of us. A year ago, inflation in Ghana was near single digit, particularly we were at 7.5% and then we find ourselves a year later in high double digits. It’s a very complicated environment, as you yourself you are aware we have come out of COVID-19. But Ghana fortunately was able to weather the impact of COVD well without recording high interest rates.”