ACCRA - Overwhelmed by high costs of food, transportation, and other necessities, Ghana is hoping that a new increase in the cost of borrowing will quell a streak of 11 straight months of rising inflation.
After an emergency meeting on August 17, the Bank of Ghana raised interest rates from its July level of 19% to 22%. Ghana’s interest rate has exceeded that mark before—it was at 26% for 11 months until November 2016.
But the 3% increase this time is the highest jump the Bank has made between monetary policy meetings since 2002, per the Financial Times. The backdrop for the spike is a July inflation rate of 31.7%, the country’s highest since 2003.
Ghana wants its inflation at around 8% but recent realities, especially in the months after the pandemic, have made that an illusion. Rising food prices have contributed to Ghana’s inflation this year, with food inflation increasing to 32.3% in July.
There’s a similar situation in Nigeria where a sixth straight month of rising inflation was confirmed this week, driven by 22% food inflation. But where the Central Bank of Nigeria has only raised rates in small leaps this year (it’s rate is currently at 14%), its west African neighbor has been more aggressive.
