Ghana opts to holds interest rate on disinflation, pending debt deal

The Bank of Ghana has opted to maintain the benchmark interest rate at a record high of 30%, extending its stance to keep policy tighter for a more extended period until a clear downward trajectory toward its target range is established.

This decision comes after a cumulative 16.5 percentage points increase in borrowing costs since November 2021. Governor Ernest Addison emphasized that the disinflation process is expected to persist with the current tight monetary policy stance and a relatively stable currency and base drift effect.

Although inflation is showing signs of deceleration, it remains elevated relative to the target, necessitating the need to sustain the policy rate at a higher level until inflation is firmly anchored on a downward path toward the medium-term target. In addition to maintaining the interest rate, the Monetary Policy Committee (MPC) increased the cash reserve ratio requirement on all bank deposits from 14% to 15%, effective November 30.