When inflation is on the rise, central banks typically increase interest rates to make borrowing more expensive, which reduces spending and ultimately slows down price increases.
In July 2023, the Bank of Ghana (BoG) Monetary Policy Committee (MPC) raised its interest rates to 30% to help drop its inflation from 43%.
The BoG kept the rates constant for about five months, helping to drive down inflation to about 23.2% in Dec 2023. Yesterday, headline inflation for July eased to about 20.90%, the lowest since March 2022 (19.40%).
This reduction was attributed to a decline in the prices of food. July’s deflation result is a continuation of a slowdown in the country’s inflation rate.
Join our WhatsApp Channel for more news
While July’s figure is still very far from the BoG target of 8%, analysts at Stears predict that Ghana’s inflation will reach 15% in the coming months.
The current rates might also prompt the MPC—which is keen to keep rates higher for longer to hedge against inflation—to review interest rates in its next meeting. The MPC will meet in September to decide the rates.
