Ghana Cedi is experiencing the worst performance in 17 years shedding further 2.7% in Monday. Ghana’s central bank on Wednesday delivered its biggest rate hike ever, a 300 basis point increase to 22% (GHCBIR=ECI), at an emergency meeting to address the economy’s rapid deterioration amid crippling inflation.
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The hike comes just three weeks after it kept its monetary policy rate unchanged at 19% and said it was pausing to observe the impact of a series of record-breaking hikes.
Ghana’s cedi currency has continued its steep decline since the July monetary policy meeting, losing more than 6% against the dollar on Wednesday alone, according to Refinitiv Eikon data. That brought total losses for 2022 to close to 39%.
Meanwhile, consumer inflation (GHCPIY=ECI) rose further to 31.7% annually in July, its highest since late 2003, and the government’s top statistician warned it was not possible to say whether inflation had peaked.
“Considering the risks to the inflation outlook, the Committee decided on a 300 basis points increase,” it said, adding that it would also raise the primary reserve requirement of banks from 12% to 15% in a phased manner.
The committee partially blamed Ghana’s current economic woes on external factors including a strong dollar and tighter global financial conditions.
It said revenue generation had been a challenge this year for the government and that without access to international capital markets, a central bank overdraft had helped to fill the gap.