{"id":413360,"date":"2018-03-26T15:28:54","date_gmt":"2018-03-26T15:28:54","guid":{"rendered":"http:\/\/citifmonline.com\/?p=413360"},"modified":"2018-03-26T15:33:21","modified_gmt":"2018-03-26T15:33:21","slug":"mixed-reactions-meet-bogs-cut-policy-rate","status":"publish","type":"post","link":"https:\/\/citifmonline.com\/2018\/03\/mixed-reactions-meet-bogs-cut-policy-rate\/","title":{"rendered":"Mixed reactions meet BoG\u2019s cut in policy rate"},"content":{"rendered":"

There are mixed reactions to the Bank of Ghana\u2019s new policy rate of 18%.<\/p>\n

The central bank on Monday, March 26, 2018 announced that it has reduced the policy rate by 200 basis points after concluding its Monetary Policy Committee (MPC) meetings for the quarter.<\/p>\n

The Governor of the Bank of Ghana, Dr. Ernest Addison among others mentioned that the decision was arrived at following indications that other variables point to the central bank\u2019s ability to meet the annual inflation target.<\/p>\n

But some industry players that\u00a0Citi Business News<\/strong>\u00a0has been speaking to have expressed diverse thoughts on the impact of the reduction.<\/p>\n

For the Head of the Economics Department of the University of Ghana, Prof. Peter Quartey, the reduction has been anticipated.<\/p>\n

He believes it should propel growth of private sector businesses.<\/p>\n

\"Head
Head of the Economics Department of the University of Ghana, Prof. Peter Quartey<\/figcaption><\/figure>\n

\u201cWe can also see that the exchange rate has been stable and then inflation has inched up slightly with expectations not likely to increase. So based on all of these and then also in line with government policy of providing cheaper access to credit to grow the private sector, I think a decline in the policy rate is more than welcome. It is however my hope that the banks or the money market will responds positively by also reducing their lending rates.\u201d<\/p>\n

Another Economist with GN Research, Emmanuel Zewu however described the 200 basis point as being a little on the high side.<\/p>\n

Though he admits to the need for a reduction, he stressed that the cedi\u2019s relative depreciation against some international currencies.<\/p>\n

\u201cIf you look at it, even though the cedi has been stable especially when it comes to the dollar rate , the other major currencies especially the Pound and the Euro are not performing too well; then you combine that with increasing petroleum prices on the international market essentially, there will be inflationary powers going forward. So I was thinking the monetary policy committee will be more conscious or cautiously reduce the monetary policy rate but the 200 basis points reduction is more or less on the high side for me,\u201d he explained.<\/p>\n

Meanwhile the CEO of the Private Enterprise Federation, Nana Osei Bonsu says the business will be comfortable only when commercial banks let it reflect in their interest rates.<\/p>\n

\u201cWhat we will want to see is that this policy rate has a direct correlation, a direct impact so when it is reduced by 200 basis points we want that to reflect in the interest rates that will be charged by the universal banks, we want to see the 200 basis points or at least 150 basis points in that regard,\u2019 he stated.<\/p>\n

\"Nana
Nana Osei Bonsu – CEO, PEF<\/figcaption><\/figure>\n

Nana Osei Bonsu added, \u201cSo what we need is a formula that allows the banks to calculate their base rates that allows the risk premium. So if the Bank of Ghana can use its authority to make a meaningful impact on the interest rates, it should have another formula that will allow the impact of the policy rate to be direct so that it will reflect in a reduction of interest rates.\u201d<\/p>\n

For 2017 alone, the Bank of Ghana reduced the policy rate by 550 basis points.<\/p>\n

The figure dropped from 25.5% to 20%.<\/p>\n

–<\/p>\n

By: Pius Amihere Eduku & Anita Arthur\/citibusinessnews.com\/Ghana<\/p>\n","protected":false},"excerpt":{"rendered":"

There are mixed reactions to the Bank of Ghana\u2019s new policy rate of 18%. The central bank on Monday, March 26, 2018 announced that it has reduced the policy rate by 200 basis points after concluding its Monetary Policy Committee (MPC) meetings for the quarter. The Governor of the Bank of Ghana, Dr. Ernest Addison […]<\/p>\n","protected":false},"author":14,"featured_media":389844,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[121,32,171,11],"tags":[1144,11914],"yoast_head":"\nMixed reactions meet BoG\u2019s cut in policy rate - Citi 97.3 FM - Relevant Radio. 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