Ghana Surprises Markets With Hike as Inflation Seen Lingering

Ghana’s central bank surprised financial markets by raising borrowing cost to a record high to speed up a deceleration in inflation, Bloomberg News reported. The monetary policy committee lifted the rate to 30% from 29.5%, Governor Ernest Addison told reporters in the capital, Accra, on Monday. Only three of 13 economists in a Bloomberg survey predicted an increase. The cedi stayed about 0.3% weaker after the announcement to trade at 11.48 per the dollar by 12:32 p.m. in Accra. The nation’s dollar bond maturing in 2032 fell slightly to 41.18 cents on the dollar, according to Bloomberg generic pricing. “Although inflation is expected to decline in the near term, baseline forecasts show a slightly higher elevated profile in the year ahead, which if not contained could embed in underlying inflationary pressures,”Addison said. “It is important that policy responds appropriately and decisively to prevent these rates from becoming embedded and consequently derail the disinflation process.” Annual inflation, which has been above the central bank’s 6% to 10% target range since September 2021, unexpectedly quickened in the past two months to 42.5%. “In the committee’s assessment, risks to inflation’s profile are judged to be elevated, driven by second-round effects of food prices,” Addison said. Read more.