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Bank of Ghana reduces policy rate to 17%

The Monetary Policy Committee (MPC) of the central bank has reduced policy rate by 100 basis points to 17 percent, concluding its review on the economy.

The MPC, at its last meeting in March 2018 reduced the policy rate by 200 basis points. The figure dropped from 20 to 18 percent.

The Governor of the Bank of Ghana, Dr. Ernest Addison, at the recent MPC meeting with the media, attributed the decision to reduce the rate to the central bank’s moves to achieve the annual inflation target.

According to him, the Monetary Policy Committee decided to reduce the policy rate to also help ease the burden of interest payments on the budget.

The policy rate is also expected to influence the lending rates of commercial banks in Ghana, subsequently.

“Global conditions remain generally positive, with continued robust recovery and accommodative monetary policy stance alongside generally subdued core inflation. However, downside risks exist, including faster tightening of global financing conditions, trade protectionism and geopolitical tensions, the governor summarised on Monday.

“The Bank’s leading indicator of economic activity suggests a slower pace of growth in the first quarter of 2018. There are however prospects of a gradual rebound over the medium-term. This is expected to be supported by the favourable external environment and policy initiatives to boost growth. The business environment is generally
favourable due to the relative stability of the cedi, reduction in interest rates and the continued disinflation process. Although private sector credit growth remains below expectations, there are emerging signs of recovery
evidenced by increased new loan advances and easing credit conditions.”

The next Monetary Policy Committee meeting is scheduled for July 18 – 20, 2018, the central bank announced. The meeting is expected to conclude on Monday, July 23rd, 2018 with the announcement of the policy decision.


Source: | Ghana

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