Ghana’s monetary policy rate of 27.0% is the highest in Africa, the World Bank has revealed
In its latest October 2024 Africa Pulse Report, the World Bank said the Bank of Ghana and other Central Banks have kept interest rates higher to anchor inflation expectations properly and secure a smoother path to their inflation targets.
“Central banks in countries that still have double-digit inflation and weakened domestic currencies (such as Angola, Nigeria, and Sierra Leone) will keep monetary policy rates higher for longer and, in fewer cases, they may increase their policy rates—particularly in countries where inflation rates still have not peaked. Broadly, currency weakness, slow fiscal adjustment, and cost pressures are among the factors driving these countries to keep a tighter stance for a longer period”.
For instance, it said Ethiopia, Ghana, and Nigeria are among the worst performing in Africa this year, and their currencies continue weakening while demand for foreign exchange remains pressing.
Nonetheless, the World Bank pointed out that with an improving inflation outlook and stabilising currencies, some countries are likely to end their hiking cycle and start reducing monetary policy rates.
However, price stickiness and the need to anchor expectations and restore the ability to achieve targets may delay benchmark rate cuts.
