Latest Ghana Benchmark Rate Hike the Largest on Record — President Promises Action Against ‘Unacceptable Depreciation of the Cedi’ – Bitcoin News

After seeing Ghana’s inflation rate surge to 31.7% in July, the Bank of Ghana responded by hiking the benchmark interest rate by 300 basis points. In addition to the rate hike, the central bank said it will gradually raise banks’ primary reserve requirements. According to one expert, President Nana Akufo–Addo needs to reduce his government size.

The largest increase in benchmark rate since 2002

In an attempt to tame the country’s runaway inflation rate, which topped 31.7% in July, the Ghanaian central bank hiked the benchmark interest rate by 300 basis points. Following the latest hike, which is the largest increase on record since 2002, Ghana’s benchmark interest rate is now 22 percent.

According to a Bloomberg report, the latest increase means Ghana’s benchmark rate has now risen by 550 basis points since November 2021. In addition to increasing the benchmark rate, the Bank of Ghana (BOG) revealed in its emergency monetary policy committee (MPC) press release that it plans gradually increase banks’ primary reserve requirement from 12 percent to 15 percent.

The BOG stated that measures will be taken to increase foreign currency inflows. This statement said:

The Bank of Ghana works in collaboration with international oil companies and mining companies to buy all the foreign currency resulting from voluntary repatriation of oil and gas export proceeds.

These steps will allow the BOG to increase its ability to conduct foreign exchange auctions.

President Nana Akufo-Addo Optimistic About Turning Around Ghana’s Economic Fortunes

Meanwhile, the country’s president, Nana Akufo-Addo, is quoted in a VOA report apportioning the blame for Ghana’s economic woes on the Covid-19 pandemic and the Ukraine-Russia war. The President of Ghana says these are what is causing problems not only in Ghana but all over the world.

Akufo–Addo however suggested that his government can handle the situation despite all of these challenges.

“We are determined to bring relief to the Ghanaian people. The unacceptable cedi depreciation will not be tolerated and other measures will be taken. Reining in inflation, by bringing down food prices, is a major preoccupation of the government, and this season’s emerging, successful harvest will assist us [to] achieve this objective, together with other policies,” the president is quoted explaining.

Reacting to the BOG’s announcement, Courage Kingsley Martey, an economist with Databank Research, is quoted in the VOA report stating that the steps taken by the central bank mean there are “going to be short-term consequences or tradeoffs.”

Godfred Bokpin from the University of Ghana is another expert who said President Nana AkufoAddo needed to show that he could control spending by shrinking the size of the government.

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Terence Zimwara

Terence Zimwara was a Zimbabwean award-winning journalist and author. His writings have covered the economic problems of several African countries and how digital currency can offer an escape route.