Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) has significantly reduced its key lending to commercial banks, the biggest cut in rate in almost 10 years.
This represents a 200 basis point reduction from the previous figure—25.5 per cent.
Governor of the central bank, Dr. Abdul Nashiru Issahaku, disclosed this at a press briefing in Accra yesterday to conclude the second MPC meeting for 2017.
Dr. Issahaku cited the declining inflation among others as reasons for the drop in the policy rate.
“The committee noted that underlying inflation pressures have eased considerably and inflation is projected to trend downwards the medium term target of 8 plus or minus 2 percent.”
He added “recent developments in inflation imply money increasing tightening consequently the MPC has decided to reduce the policy rate by 200 basis points to 23.5 percent.”
The BoG governor further noted that the confidence of an improved inflation and indication of low growth warranted a reduction of the policy.
“However, there are indications that growth is likely to remain significantly below potential which alongside an improved inflation outlook, provides some scope for monetary policy easing.”
This is the second time the MPC has reduced the policy rate after keeping it unchanged at 26 per cent for a greater part of 2016.
The policy rate is the rate at which commercial banks borrow from the central bank for onward lending to their customers.
Join GhanaStar.com to receive daily email alerts of breaking news in Ghana. GhanaStar.com is your source for all Ghana News. Get the latest Ghana news, breaking news, sports, politics, entertainment and more about Ghana, Africa and beyond.
