The Bank of Ghana (BOG) has raised the policy rate by 300 basis points (bp) to 22% in a historic move; meant to stop growing inflationary pressures and contain the fall in the value of the Ghana cedi.
The central bank also raised the amount of reserves universal banks are supposed to keep against deposits; known as primary reserve requirement, from 12% to 15% to help mop up liquidity and douse the price pressures.
The two policy decisions are part of a raft of measures the BoG took after an emergency Monetary Policy Committee (MPC).
The seven-member committee also announced plans by the central bank to purchase all foreign exchange; arising from the voluntary repatriation of export proceeds from mining as well as oil and gas companies; to help increase the availability of forex in the economy.
The BoG is betting on the measures to help arrest the cedi depreciation which has heightened in the face of growing microfiscal challenges.