Accra, Ghana – (African Boulevard News) – Ghana has taken a decisive step in its fight against soaring inflation by hiking its key lending rate. The move comes as the West African country grapples with its worst economic crisis in years, marked by double-digit inflation, a weak Cedi, and mounting public debt.
The Central Bank of Ghana announced that it has raised the benchmark interest rate by 100 basis points to 14.5%, in an effort to curb rising inflationary pressures. This decision follows the recent surge in annual inflation, which reached a staggering 42.5% in May and June, necessitating bold measures to stabilize the economy.
Inflation has been a persistent challenge for Ghana, eroding purchasing power and putting a strain on households and businesses. The government and the central bank are keenly aware of the urgent need to tackle this issue head-on. By increasing the lending rate, the central bank hopes to slash borrowing and spending, which in turn should reduce demand and subsequently lower inflation rates.
Experts have praised the central bank’s decision, highlighting its importance in addressing Ghana’s economic woes. Dr. Ama Amissah, an economist at the University of Ghana, expressed optimism about the move, stating, “Raising the key lending rate is a necessary step to rein in inflation. It sends a strong signal to the market that the central bank is committed to taming inflation and restoring economic stability.”
Critics, however, argue that the rate hike could have adverse effects on businesses and individuals who rely on borrowing for investment and consumption. They argue that the increased cost of borrowing could dampen economic activity and hinder growth. It remains to be seen how this decision will play out in the short and long term.
The government of Ghana is simultaneously pursuing other measures to tackle inflation. These actions include fiscal consolidation, reducing the country’s fiscal deficit, and implementing structural reforms to boost productivity and competitiveness.
Ghana’s President, Nana Akufo-Addo, underscored the government’s commitment to addressing the economic challenges facing the country. In a recent statement, he highlighted the importance of these measures, stating, “We are laser-focused on stabilizing the economy and restoring investor confidence. Ghana has a resilient economy, and with concerted efforts, we will overcome these challenges.”
The central bank’s decision to hike the key lending rate is a significant step towards taming inflation and stabilizing Ghana’s economy. While the move has garnered support from experts, there are concerns about its potential impact on businesses and borrowers. Yet, with a comprehensive approach that includes fiscal measures and structural reforms, Ghana is hopeful of overcoming its economic crisis and setting a course for sustainable growth.
