UPDATE 3-Bank of Ghana seeks to bolster cedi with rate hike

Fri Apr 13, 2012 5:21pm GMT

* 1 pct point rate hike follows similar rise in Feb

* Bank fears cedi weakness is a risk to economy

* Inflation fears high in election year

* Analysts say move may not be enough to halt cedi slide (Adds deputy governor's comments, details)

By Kwasi Kpodo

ACCRA, April 13 (Reuters) - The Bank of Ghana hiked its key interest rate by a full percentage point to 14.5 percent on Friday to support the cedi, warning that the weakness of the currency posed an inflationary threat and endangered the stability of the economy.

Ghana is the latest African nation to gain middle-income status after it began commercial oil output in 2010. Political stability and a growing middle class have made it an attractive target for foreign investors.

But an import-driven slide in the cedi, which has dropped more than 8 percent against the dollar this year, prompted a rate hike at the upper end of analysts' expectations.

The central bank also issued one of its strongest warnings on the inflationary risks ahead.   Continued...

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