Ghana: Bank of Ghana Expected to Hike Interest Rates in January

The Ghanaian cedi ranked top of the table of the worst-performing currencies in the world last year

The Bank of Ghana is seen lifting interest rates by as much as 175 basis points when rate-setters meet this month as the West African country looks to rein in galloping inflation.

A Reuters poll of eight economists conducted between 18 and 23 January expects rates to be upped to 28.8 per cent, being the median forecast.

While two experts anticipate that the Ghanaian apex bank would retain the current rate at 27 per cent, the rest expect upward adjustment within the range of 100 and 400 basis points.

“In Ghana, despite the central bank delivering 1,350 basis points of interest rate hikes, inflation has continued to rise,” Reuters quoted Virág Fórizs at Capital Economics as saying.

The Ghanaian economy is taking a blow from a severely pressured currency and defiant inflation, with consumer inflation soaring to its pinnacle in 22 years last month.

The government has put on hold payments on dollar bonds, foreign commercial loans and some bilateral debt, causing the bonds to trade at a deeply distressed level in December.

“With price pressures showing no sign of easing, we expect policymakers to raise the benchmark rate further,” Mr Fórizs further said.

Rates in the country are anticipated to jump 25 basis points to 29 per cent in March but will be steady in May.

The cedi ranked top of the table of the worst-performing currencies in the world last year.

The inflation rate in the West African country also surged to 54.1 per cent in December.