GhanaInsightsMacroeconomic updateMonetary Policy

31 January 2023

Ghana MPC Update : A Dovish Hike

In brief

  • The Bank of Ghana announced a 100bps hike in the monetary policy rate to 28.0% at its January 2023 Monetary Policy Committee (MPC) meeting (Market average expectation: +150bps | IC Insights: +200bps


  • The 100bps hike marks a sharp slowdown in the pace of monetary tightening observed since 2022, which had averaged 250bps per hike until now. We reckon the MPC is leaning on fiscal adjustment and a successful debt restructuring agreement by end 1Q2023 to drive inflation on a downward path. This stance makes the latest increase in the policy rate feel like a dovish hike


  • The budget deficit overshot its FY2022 target and the FY2021 outturn as perennial revenue underperformance amidst the rigid public expenditure framework widened the financing gap


  • External debt burden intensified in 2022 due to higher borrowing and FX pressures


  • Foreign portfolio outflows offset the marginal decline in the current account deficit but suspension of debt service could ease the pressure on forex reserves in 2023