The Relationship between Interest Rates and Inflation in Ghana and Their Impact on Economic Growth for the Period 2006-2019

Abstract

High interest rates and high inflation rates have been the bane of many developing countries especially in Sub Saharan Africa. The researcher sought to determine the relationship between these two variables and their resultant effect on the economic growth of Ghana over last fourteen years. Changes in interest rates within the period were compared with changes in inflation rates. These figures were used to determine the coefficient of correlation between these variables. The changes in these two variables were also compared with the changes in the economic growth rate within the period to ascertain any relationship between them. The research showed that interest rates and inflation rates in Ghana were positively correlated and they had strong impact on the economic growth of Ghana within the period under review. The researcher, however, observed that the coefficient of correlation between interest rates and inflation rates from 2006-2015 was stronger than from 2016-2019.