The policy rate of the Bank of Ghana is likely to go up for the 7th time since November 2021.

According to Bloomberg, the higher-than-expected jump in inflation in the last two months of 2022 and renewed weakness in the cedi will push the policy rate up, from 27.0%.

Any increase in the policy rate will mean loans will become more expensive going further.

Head of Research at Standard Chartered Bank in charge of Africa and Middle East, Razia Khan, is also projecting a 200 basis points increase in the policy rate to a peak of 31.0% by March 2022.

“Ghana’s inflation has continued to increase and so we see a 200 basis points hike in January and a further 200 basis points in March 2023 to a peak of 31%”.

She added the longer the debt restructuring takes, the higher the pressure on the cedi, forcing the Bank of Ghana to tighten the policy rate further.

“The risk now is that if the debt restructuring takes even longer to conclude, then obviously the currency comes under pressure and the bank of Ghana may have to tighten further,” Razia Khan said.

The Bank of Ghana in November 2022 increased its policy rate by 2.5 percentage points to 27%, citing risks to inflation and exchange rate concerns as reasons.

Meanwhile, the Monetary Policy Committee is expected to begin its quarterly meeting from Tuesday January 24, 2022 to Friday January 27, 2022 to review developments in the economy.