Staff Writer
On Monday, the Ghanaian central bank increased the benchmark lending rate by an additional 50 basis points to 30%. The decision to increase borrowing costs surprised the financial markets.
With double-digit inflation, a depreciating Cedi, and rising public debt, Accra is attempting to halt its worst economic crisis in years. In May and June, annual inflation picked up after dropping from 54% in December to 42.5%.
Since late 2021, the central bank has gradually increased interest rates with only a few breaks in the cycle.
Last year, Ghana missed most of its debt payments and asked its lenders for forgiveness. The cocoa and oil producer signed a $3 billion bailout loan from the International Monetary Fund in May of this year.
According to the terms of the IMF agreement, the nation must execute severe budget cutbacks, eliminate subsidies, and boost tax revenue.
The crucial interest rate increase will probably slow economic development and put additional pressure on consumers and businesses already struggling with rising living expenses.
