Monetary Policy Committee (MPC) of the Bank of Ghana has maintained the policy rate at 20 per cent.
The decision was announced at the media briefing to conclude the MPC’s annual meetings on Monday, January 22, 2018.
The MPC last year (2017) reduced the policy rate by 550 basis points.
In 2017, the figure went down from 25.5 per cent in January to 20 per cent as at November 2017.
Governor of the Bank of Ghana, Dr Ernest Addison, who addressed the media, explained that the decision is to help keep inflation at a stable rate.
“Economic activity has picked up significantly while private sector credit growth is recovering, the non oil sector of the economy is also rebounding after the sluggish performance in the first half of the year, supported by continued improvement in the economic fundamentals.”
“While there was a trend decline in headline and core inflation allowing for some 550 basis points policy rate cut the committee has observed some emerging pressures. Under the circumstances and to ensure that inflation target horizon is maintained and the medium term inflation of eight plus or minus 2 is achieved this year, the committee decided to maintain the policy rate at 20 per cent,” the governor added.
The policy rate influences the central bank’s rate of lending to commercial banks in the country.
Some industry watchers have criticised the margin of decrease in the lending rates of commercial banks despite the significant reduction from the Bank of Ghana.
Checks by Citi Business News, for instance, have shown that between January 2017 and December 2017, the average lending rate among banks have decreased by about 7 per cent.