The Monetary Policy Committee of the Bank of Ghana has reduced its lending rate by a 100 basis point from 14.5 percent to 13.5 percent.
What this means is that individuals and businesses will be seeing a drop in the cost of borrowing in line with the new policy rate.
This is the first time the Prime rate has been lowered post-coivd-19.
Governor of the Bank of Ghana Dr. Ernest Addison announced this to journalists at the 100th MPC Meeting on Monday.
According to him, their decision was based on the improvement in macroeconomic conditions on the global front and the local front.
“We see progress in the economy and in inflation coming down and we have brought the rate down to signal that there is some progress. The last time we did that was in early 2020. Soon after that we got the COVID-19 shock so the policy committee could not take any other decisions but to not change the policy rate. Now to complicate matters, this was also an election year. So, we were not allowed to reduce the policy rate within that contest.
“And so the prudent thing to do was to keep the policy rate where it was. In 2021, the whole risk associated with the election is behind us. If we look at the numbers, you can see that the global environment has improved somewhat. In the first 2, 3 months of the year, we have seen non-residents come back to invest in the bonds market, so we have attracted some non- residents. Then in April we have had this big drop in inflation. I think all the arguments are there. So, the central bank will not wait for another complication which will stop you from resuming your policy rate adjustment in line with the improvement that we have seen,” Dr Addison added.
