BoG raises policy rate to 22%; the cost of borrowing will explode significantly
The Bank of Ghana raised the policy rate by 300 basis points to 22%, after an Emergency Monetary Policy Committee meeting today, August 17e2022.
This decision is part of the measures aimed at addressing the risks weighing on the outlook for inflation.
However, the cost of borrowing is expected to increase significantly and, therefore, increase the cost of living and doing business.
The MPC has also taken additional measures, including increasing the primary reserve requirement for banks from 12% to 15%, to be implemented gradually.
Thus, the mandatory reserve will increase to 13% from September 1, 2022 then to 14% on October 1, 2022 then to 15% on November 1st2022.
Strengthening of the cedi
To boost the supply of foreign exchange to the economy, the Bank of Ghana said it was working with mining companies, international oil companies and their bankers to purchase all foreign exchange from voluntary repatriation of export earnings mining, and oil and gas companies.
This, she said, will strengthen the central bank’s currency auctions, and therefore the cedi.
In July 2022, the Bank of Ghana’s MPC kept the policy rate at 19%, citing risks for inflation but balance for growth.