The Monetary Policy Committee (MPC) of the Bank of Ghana will hold its 110th Regular Meetings from Tuesday, January 24, 2023 to Friday, January 27, 2023 to review developments in the economy.
The meetings will conclude with a press conference on Monday, January 30, 2023 to announce the decision of the Committee.
Last month, the Bank of Ghana increased its policy rate by 2.5 percentage points to 27%, citing risks to inflation and exchange rate concerns as reasons. This saw cost of borrowing go up marginally.
The inflation forecast shows that in the outlook, inflation will likely peak in the first quarter of 2023 and settle at around 25% by the end of 2023. This forecast is conditioned on the continued maintenance of tight monetary policy stance and the deployment of tools to contain excess liquidity in the economy. There are however some risks to this forecast that would have to be monitored, including additional pressures from the proposed VAT increase, and exchange rate pressures. Continued vigilance to the evolution of these potential price pressures in the outlook will be key”, Dr. Ernest Addison, Governor of the Bank of Ghana stated”.
Following the increase in the policy rate, consumer spending also declined marginally and this is expected to put inflation in check.
Interest rates trend upwards
During the last MPC review, interest rates on the money markets trended upwards across the spectrum of the yield curve, in line with the tightening of monetary policy stance.
At the short-end of the market, the 91-day and 182-day Treasury bill rates increased to 31.53% and 32.61% respectively, in October 2022, from 12.46% and 13.16% respectively, in the same period of 2021. Similarly, the rate on the 364-day bill increased to 32.32%, from 16.24% over the review period.
On the secondary market, rates on all bonds, from 2-year through to 20-years, almost doubled over the one-year review period