Covid-19 has been a heavy blow to the Ghanaian economy but the country is gradually getting back on track. However inflationary risks remain. To cope with this situation, the central bank regularly adjusts its policy rate.

The Central Bank of Ghana (BoG) has raised its benchmark rate by 100 basis points to 14.5%, from 13.5%. The information was made public by the Monetary Policy Committee in a Nov 22 statement.

“Currently, headline inflation is above the upper limit of the medium-term target band and the Committee noted significant risks to the inflation outlook. These risks include rising global inflation, high energy prices, uncertainties surrounding food prices and investor behaviour,” the statement reads. This is in addition to the impact of the covid-19 pandemic.

The measure adopted by the Central Bank aims to address headline inflation, which has been growing steadily for several months. It rose from 7.5% in May 2021 to 11% in October, driven by both food and non-food price increases. This is the first increase in policy rate since 2015. In the second quarter of this year, the banking institution had announced that its key rate was being cut from 14.5% to 13.5%.

Despite this situation, the country's economy has recovered and is growing at a "steady pace". According to the Monetary Policy Committee, high-frequency economic indicators reflect an acceleration in the pace of economic activity, close to pre-pandemic levels.

Jean-Marc Gogbeu, intern