Accra - The Bank of Ghana raised its prime interest rate by 100 basis points to 19.0 percent on Wednesday, citing risks to the West African nation's fiscal outlook.
Central Bank Governor Henry Kofi Wampah said the bank's Monetary Policy Committee viewed the risks to inflation as elevated and decided to increase its policy rate to contain inflationary pressures.
Annual consumer price inflation rose to a four-year high of 15.0 percent in June from 14.8 percent in May, pushing the rate further past the 2014 target of 9.5 percent, plus or minus 2 percent, set in November's annual budget.
“Headline inflation, although it has slowed down on a monthly basis, continued to drift further from the target band, underpinned by cost push factors alongside heightened inflation expectations,” Wampah told a news conference.
“The persisting fiscal and exchange rate pressures have provided additional impetus for the worsening inflation outlook,” he said.
Ghana saw five years of rapid economic growth on the back of exports of gold, cocoa and oil, but its currency has fallen around 30 percent this year against the dollar and it is wrestling with a stubbornly high budget deficit. - Reuters