The Monetary Policy Committee of the Bank of Ghana (BoG) has maintained the policy rate for the first time this year at 25.5 percent.
The policy rate, which is the rate at which the central bank lends money to commercial banks was last reduced in November 2016 from 26 percent by 50 basis point to 25.5 percent— due to inflation and cedi stabilization.
Speaking to journalists at a press conference a while, Dr. Abdul-Nashiru Issahaku, explained that the decision to maintain the figure was largely influenced by the move to enhance fiscal consolidation.
He stated that the decline in headline and core inflation is also a positive indication that informed the committee to maintain the figure.
Prior to the announcement, economist Professor Godfred Bokpin impressed on the central bank to reduce the policy rate.
Professor Bokpin explained that a decline in the policy rate by at least 200 basis points would have relieved businesses of their current plight and reflect government’s reassurance that Ghana is open for business.
“Looking at inflation that is about 15 percent, I think any reduction between 200 and 500 basis points will be ideal,” he stated.
Meanwhile the central bank has shifted its medium term inflation target to 2018.
Ghana’s interest rates are one of the highest in the world with average base rates hovering around 27 percent.
Bankers have over the years asserted that the policy rate which is also used by banks to calculate their base rates must be reduced drastically in order for them to also reduce their rates.
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By: Pius Amihere Eduku/Lawrence Segbefia/citibusinessnews.com/Ghana