Ghana Imposes Record Interest Rate Hike to Slow Inflation

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Ghana's central bank announced its biggest ever interest rate hike on Monday as it seeks to slow rampant inflation that threatens to create a debt crisis in one of West Africa's largest economies, Reuters reported. The Bank of Ghana raised its main lending rate by 250 basis points to 17%, signaling an aggressive stance against the rocketing price of goods from flour to sugar to fuel, and against a depreciating local currency that has dented investor confidence. Ghana was long seen as a rising star among Africa's emerging market economies, but underwhelming oil revenues and supply chain disruptions amid the COVID-19 pandemic have dampened expectations. Consumer inflation reached 15.7% year-on-year in February, the highest since 2016. Food, transportation and housing prices have seen the greatest spikes. It is the largest increase in Ghana's history, according to government records, more than double the 100-basis-point rise predicted by a Reuters poll of 10 economists last week. "The uncertainty surrounding price development and its impact on economic activity is weighing down business and consumer confidence," the bank's governor, Ernest Addison, told a news conference. "The risks to inflation are on the upside." Read more.