In a bid to offer the ailing cedi support and arrest soaring inflation expectations, the Bank of Ghana (BoG) delivered an outsized 300bp rate hike at its emergency meeting on Wednesday, taking the benchmark interest rate to 22 percent. Yesterday’s rate hike marks the biggest one on record and takes the cumulative rate increase since November to 850bp. The BoG also raised the primary reserve requirement ratio of banks from 12 percent to 15 percent. The increased reserve requirement ratio will be phased in gradually from 1 September to 1 November. Another big takeout from the meeting was that the BoG is planning to buy foreign exchange from mining and oil companies to bolster its reserves, which have dropped to the lowest level since 2019.
