BoG maintains policy rate at 30% for second consecutive time
The Central Bank has maintained its monetary policy rate at 30%.
This is the second time the BoG has maintained the policy rate at 30%.
Policy rate hikes by the Central Bank since November last year stand at a cumulative figure of 1,300 basis points (13%).
The MPC’s decision to maintain the policy rate at its 115th MPC pree briefing, is on the back of the 290bps (2.9%) decrease in the country’s headline inflation rate from 38.1% in September to 35.2% at end-October 2023.
The BoG’s decision to maintain the key benchmark interest rate is in line with the monetary policy tightening stance proposed by the IMF in the implementation of the ECF programme.
It is also in line with the objective of the Central Bank to rein in inflation to the medium-term target band of 6%-10%.
Given the pause in the policy rate, interest rates on loans to the private sector are expected to also remain steady.
With interest rates on loans being steady, production costs by businesses are expected to largely remain the same.
At the moment, average rates on loans given to individuals and businesses by banks in the country stand at 32.69% at end-October 2023.
This is on the account of increments in the Bank of Ghana’s policy rate which subsequently leads to an increase in the Ghana Reference Rate (GRR) and risk assessment charges on borrowers.
Announcing the MPC’s decision to maintain the policy rate, Governor of the Central Bank, Dr Ernest Addison noted that, “Headline inflation has continued to decelerate in the past few months consistent with forecasts. The latest Bank forecast indicates that the disinflation process is expected to continue, supported by the current tight monetary policy stance, relatively stable exchange rate, and base drift effects. All the core measures of inflation and inflation expectations are pointing downwards, and the Bank will remain vigilant on risks to the disinflation process.
“The Committee noted that although inflation is decelerating, it remains high relative to target. Therefore, there is a need to keep the policy rate tighter-for-longer until inflation is firmly anchored on a downward trajectory towards the medium-term target. Given these considerations, the Committee decided to maintain the monetary policy rate at 30.0 percent.”
