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The Monetary Policy Committee of the Bank of Ghana is set to meet a week earlier than originally advertised following recent developments in the economy. A statement released yesterday by the regulator said, “The 105th Monetary Policy Committee Meeting, originally planned to take place from March 23 -25, has been rescheduled a week earlier to between Wednesday, March 16, 2022, and Friday, March 18, 2022”. The committee is expected to hold its press conference on Monday, March 21 to announce a new policy rate.

The announcement came just hours after the Ghana Statistical Service announced the inflation rate for February 2022 at 15.7 %, the highest since 2016. This is higher than the February 2021 figure of 10.3%, and a 2.4% increase from last month’s figure of  13.9%.  Paakwesiasare.biz in an article yesterday predicted the Bank of Ghana which has a mandate to regulate inflation may intervene to hike the Policy rate which currently stands at 14.50 percent to lower inflation and limit the supply of money. Inflation is the persistent increase in the prices of goods and services over a period that occurs mainly when demand for goods exceeds supply. The consequent effect is that it reduces the individual’s purchasing power and weakens the value of the local currency against its major foreign currencies, especially for countries that rely heavily on imports. Another reason the Bank of Ghana will need to intervene quickly is that rising food prices have been a major source of political instability in North Africa where expensive food has stirred a revolution before.

Many Central Banks are tasked with the mandate and responsibility of checking inflation, which is a killer, raising prices, lowering consumer purchasing power, the values of pensions, savings, and Treasury notes, and lowering the cost of borrowing. The development is not only akin to Ghana as inflation has risen steadily in America over the last few months, mainly on account of increases in car prices and lately fuel. The increase in car prices is because car manufacturers are not producing enough due to a shortage of semiconductor chips, a situation arising out of soaring demand, and a lack of supply caused by the impact of Covid-19. There are expectations that the Fed will hike the interest rates this month to dampen spending and bring down prices. This however could affect activities on the stock market as high borrowing costs eats into the profits of companies and limit other investments into expansion and growth which ultimately will result in lower revenues and a fall in stock prices.

Recent developments on the global front have caused disruptions in supply lines and consequently driven prices of oil and other related products to an all-time high, causing ripple effects in many economies, particularly Africa which relies heavily on imports. The geopolitical conflict between Russia and Ukraine has entered its second week with no clear signs of abatement. The two eastern European economies are one of the world’s largest producers of oil and wheat.