GhanaInsightsMacroeconomic updateMonetary Policy

10 October 2022

Ghana’s MPR Hike : Little to cheer

In brief

  • As Ghana’s monetary policy rate falls behind the runaway inflation, the monetary authorities had little choice against aggressive back-to-back rate hikes.


  • The ongoing monetization of the budget deficit provides a strong basis to expect sustained upswing in near-term inflation, building a case for further rate hikes if inflation does not reverse course in 1Q2023.


  • The Treasury could overshoot its FY2022 deficit target with financing needs remaining elevated in the near-term.


  • The Ghanaian Cedi could remain under pressure as risk-aversion supports foreign portfolio outflows to chip away Ghana’s external buffer.


  • The bearish run could continue on rates as bids for local currency bonds remain scanty amidst the flight to safe haven assets such as the USD.