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BoG increases policy rate to 17 percent

BY: Graphic.com.gh
BoG increases policy rate to 17 percent
Dr. Ernest Addison - Governor of the Bank of Ghana

The Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) has increased the policy rate by 250 basis points to 17 percent.

This is the first time the Central Bank has increased the key rate since November 2021.

At a press briefing on Monday )march 21, 2022), the Governor of the Bank of Ghana, Dr. Ernest Addison said all is being done to check inflation.

He attributed the upward review of the rate to the sharp rise in inflation as well as the upsurge in prices of goods and services as well as petroleum products.

“Headline inflation has risen sharply to 15.7 percent in February 2022, and both headline and core inflation are significantly above the upper limit of the medium-term target band. The uncertainty surrounding price developments and its impact on economic activity is weighing down business and consumer confidence. The risks in the outlook for inflation are on the upside and include petroleum price adjustments and transportation costs, and exchange rate depreciation.”

“Under these circumstances, the committee has decided to increase the policy rate by 250 basis points to 17 percent. The Bank’s latest forecast still depicts an elevated inflation profile in the near term, with inflation falling within the medium-term target band within a year”, he revealed.

At this MPC meeting, the combination of tighter global financing conditions, sharp pressures on the exchange rate, and elevated inflation pose some policy challenges.

“The Bank of Ghana will, effective, 1st April 2022, enforce the following measures in relation to universal banks: The cash reserve ratio has been increased to 12%, the capital conversation buffer has been reset to the pre-pandemic level of 3% making the capital adequacy ratio a total of 13% and the provisional rate for loans in the other loans exceptionally mentioned category, has been reset to the pre-pandemic level of 3%,” Dr. Addison added.

Monetary policy rate

The monetary policy rate, which is of keen interest to businesses, signals the rate at which the Central Bank will lend to commercial banks.

It also subsequently influences average lending rates on loans to individuals and businesses.

Trends

The Policy rate Graph gives readers an overview of the historical trends in the key policy rate of the Bank of Ghana. 

Historically since the inception of business of the bank, the key rate announced by the Bank of Ghana has undergone various transformations and changes.

First, the name rediscount was used during the period, then the bank rate, then the prime rate, and now known as the monetary policy rate

The rate is a signaling rate that is supposed to serve as a reference cap for all other rates in the economy.

Meeting No. MPC Dates Effective Date BOG Policy Rate

1 November 20 – 21, 2002 21 Nov 2002 25.5

2 January 22 – 24, 2003 24 Jan 2003 25.5

3 March 19 – 21, 2003 21 Mar 2003 27.5

4 May 21 – 23, 2003 23 May 2003 27.5

5 July 16 – 18, 2003 18 Jul 2003 26.0

6 October 8 – 10, 2003 10 Oct 2003 24.0

7 December 10 – 12, 2003 12 Dec 2003 21.5

8 February 18 – 20, 2004 20 Feb 2004 20.0

9 May 18 – 20, 2004 21 May 2004 18.5

10 August 17 – 20, 2004 20 Aug 2004 18.5

11 November 9 – 12, 2004 12 Nov 2004 18.5

12 January 17 – 21, 2005 24 Jan 2005 18.5

13 March 22 – 24, 2005 29 Mar 2005 15.5

14 May 24 – 27, 2005 30 May 2005 16.5

15 July 20 – 22, 2005 25 Jul 2005 16.5

16 September 7 – 9, 2005 12 Sep 2005 15.5

17 November 22 – 25, 2005 28 Nov 2005 15.5

18 January 25 – 30, 2006 30 Jan 2006 14.5

19 March 21 – 24, 2006 27 Mar 2006 14.5

20 May 16 – 19, 2006 22 May 2006 14.5

21 July 25 – 28, 2006 31 Jul 2006 14.5

22 October 10 – 13, 2006 16 Oct 2006 14.5

23 December 13 – 15, 2006 18 Dec 2006 12.5

24 March 12 – 16, 2007 19 Mar 2007 12.5

25 May 14 – 18, 2007 21 May 2007 12.5

26 August 21 -24, 2007 27 Aug 2007 12.5

27 October 15 – 19, 2007 22 Oct 2007 13.5

28 January 21 – 25, 2008 28 Jan 2008 13.5

29 March 10 – 14, 2008 17 Mar 2008 14.3

30 May 19 – 23, 2008 23 May 2008 16.0

31 July 14 – 18, 2008 21 Jul 2008 17.0

32 October 21 – 24, 2008 28 Oct 2008 17.0

33 February 17 – 23, 2009 24 Feb 2009 18.5

34 May 6 – 8, 2009 12 May 2009 18.5

35 July 14 – 17, 2009 21 Jul 2009 18.5

36 September 16 – 22, 2009 23 Sep 2009 18.5

37 November 16 – 18, 2009 20 Nov 2009 18.0

38 February 15 – 17, 2010 19 Feb 2010 16.0

39 April 12 – 14, 2010 16 Apr 2010 15.0

40 July 12 -16, 2010 16 Jul 2010 13.5

41 September 13 -17, 2010 17 Sep 2010 13.5

42 December 6 – 10, 2010 10 Dec 2010 13.5

43 February 14 – 18, 2011 18 Feb 2011 13.5

44 May 9 – 13, 2011 13 May 2011 13.0

45 July 4 – 6, 2011 06 Jul 2011 12.5

46 August 29 – September 1, 2011 01 Sep 2011 12.5

47 October 17 – 19, 2011 19 Oct 2011 12.5

48 December 19 – 21, 2011 21 Dec 2011 12.5

49 February 13 – 15, 2012 15 Feb 2012 13.5

50 April 11 – 13, 2012 13 Apr 2012 14.5

51 June 11 – 13, 2012 13 Jun 2012 15.0

52 September 10 – 12, 2012 12 Sep 2012 15.0

53 November 12 – 14, 2012 14 Nov 2012 15.0

54 February 11 – 13, 2013 13 Feb 2013 15.0

55 May 20 – 22, 2013 22 May 2013 16.0

56 July 29 – 31, 2013 31 Jul 2013 16.0

57 September 16 – 18, 2013 18 Sep 2013 16.0

58 November 25 – 27, 2013 27 Nov 2013 16.0

59 February 5 – 6, 2014 06 Feb 2014 18.0

60 March 31 – April 2, 2014 02 Apr 2014 18.0

61 September 16 – 18, 2014 18 Sep 2014 19.0

62 November 10 – 12, 2014 12 Nov 2014 21.0

63 February 16 – 18, 2015 18 Feb 2015 21.0

64 May 11 – 13, 2015 13 May 2015 22.0

65 July 13 – 15, 2015 15 Jul 2015 24.0

66 September 11 – 14, 2015 14 Sep 2015 25.0

67 November 13 – 16, 2015 16 Nov 2015 26.0

68 January 22 – 25, 2016 25 Jan 2016 26.0

69 March 18 – 21, 2016 21 Mar 2016 26.0

70 May 13 – 16, 2016 16 May 2016 26.0

71 July 15 – 18, 2016 18 Jul 2016 26.0

72 September 16 – 19, 2016 19 Sep 2016 26.0

73 November 18 – 21, 2016 21 Nov 2016 25.5

74 January 20 – 23, 2017 23 Jan 2017 25.5

75 March 24 – 27, 2017 27 Mar 2017 23.5

76 May 19 – 22, 2017 22 May 2017 22.5

77 July 21 – 24, 2017 24 Jul 2017 21.0

78 September 22 – 25, 2017 25 Sep 2017 21.0

79 November 24 – 27, 2017 27 Nov 2017 20.0

80 January 17 – 19, 2018 19 Jan 2018 20.0

81 March 21 – 23, 2018 23 Mar 2018 16.0

82 May 16 – 18, 2018 21 May 2018 17.0

83 July 18 – 20, 2018 23 Jul 2018 17.0

84 September 18 – 20, 2018 24 Sep 2018 17.0

85 November 21 – 23, 2018 26 Nov 2018 17.0

86 January 23 – 25, 2019 28 Jan 2019 16.0

87 March 26 – 29, 2019 01 Apr 2019 16.0

88 May 22 – 24, 2019 27 May 2019 16.0

89 July 17 – 18, 2019 19 Jul 2019 16.0

90 September 17 – 19, 2019 20 Sep 2019 16.0

91 November 20 – 22, 2019 25 Nov 2019 16.0

92 January 27 – 30, 2020 31 Jan 2020 16.0

93 March 16 – 18, 2020 18 Mar 2020 14.5

94 May 19 – 21, 2020 22 May 2020 14.5

95 July 22 – 24, 2020 27 Jul 2020 14.5

96 September 22 – 25, 2020 28 Sep 2020 14.5

97 November 18 – 20, 2020 23 Nov 2020 14.5

98 January 26 – 29, 2021 01 Feb 2021 14.5

99 March 17 – 19, 2021 22 Mar 2021 14.5

100 May 26 – 28, 2021 31 May 2021 13.5

101 July 21 – 23, 2021 26 Jul 2021 13.5

102 September 22 – 24, 2021 27 Sep 2021 13.5

103 November 16 – 19, 2021 22 Nov 2021 14.5

104 January 25 – 28, 2022 31 Jan 2022 14.5

105 March 16 – 18, 2022 21 Mar 2022 17.0