BoG Cuts Policy Rate by 200 Basis Points to 27% Amid Improving Economic Conditions
The Bank of Ghana’s Monetary Policy Committee has cut its key lending rate by 200 basis points to 27%, down from 29%.
This, according to the Governor, Dr Ernest Addison is aimed at fostering a more accommodative monetary environment.
Governor Dr. Ernest Addison, speaking at the MPC press briefing on Friday, quipped the decision to cut the policy rate was driven by an improved economic outlook, signaling a shift towards a more dovish stance amid stabilizing macroeconomic conditions.
The reduction also reflects optimism in inflationary pressures easing and a general strengthening of the fiscal framework.
The rate cut is expected to lower borrowing costs for commercial banks, potentially bolstering credit growth and providing further impetus to economic recovery.
Assigning reasons for the new policy rate Dr Addison quipped, “In the assessment of the Committee, preliminary data since the last MPC meeting held in July 2024 indicates that macroeconomic conditions have generally improved. Headline inflation has eased, and growth has `picked up. Fiscal policy implementation has been robust, providing impulse that is supportive of growth, while monetary conditions have remained tight and supportive of the disinflation process.
“Headline inflation, since the first quarter, has declined for 5 consecutive months by 5.4 percentage points. Core inflation has also declined sharply over the same comparative period by 6.9 percentage points. These trends suggest that the disinflation process is on course. The latest forecasts show that inflation will continue to ease towards the range target of 13-17 percent for the year and steadily track back towards the medium-term target of 6-10 percent by the end of 2025, barring unanticipated shocks. At the current juncture, the committee judged the risks to inflation outlook as fairly balanced.
“Given these considerations, the Committee decided to lower the Monetary Policy Rate by 200 basis points to 27.0 percent.”
