A global investment and research firm, Goldman Sachs, has predicted that the Bank of Ghana (BoG) will raise its policy rate by 200 basis points (bp) on Wednesday when it concludes an emergency Monetary Policy Committee (MPC) meeting called to respond to the current economic challenges.
This is according to the Daily Graphic.
The firm said in a research update issued on August 16, 2022 that the central bank would raise the rate from the current 19 per cent to 21 per cent in an attempt to calm the turbulence in the foreign exchange (FX) market and help ease inflationary pressures.
It said the cedi had so far lost more than 50 per cent of its value and a rate hike could help ease the pressure.
The seven-member MPC, chaired by the Governor of BoG, Dr Ernest Addison, last stayed the rate at 19 per cent in July 2022, citing the need to stimulate growth at a time when inflationary pressures were easing.
Emergency meeting
The Goldman Sachs update was in response to an earlier notice from BoG that it will undertake an emergency MPC meeting Wednesday (August 17, 2022) to review recent developments in the economy.
The notice, issued last Monday, said the meeting would conclude with the announcement of the decisions of the committee.
Cedi’s challenges
In its research update, Goldman Sachs said the meeting came after an acceleration in the pace of depreciation of the cedi in the past two weeks.
It said the local currency lost almost 10 per cent of its value to the United States (USA) dollar in the past two weeks, amounting to a cumulative 50 per cent currency depreciation year-to-date.
Source: Citinewsroom