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Businesses, bankers push for drop in BoG’s policy rate

Sept. 24, 2018, 8:09 a.m.

The Monetary Policy Committee (MPC) of the Bank of Ghana may take any decision but increase its policy rate for banks.

These are the indications from businesses and banks ahead of the announcement of the policy rate later on Monday [September 24, 2018].

The MPC has since the beginning of the year reduced its policy rate by 300 basis points, cumulatively.

At its last meeting in July 2018 however, the central bank kept the policy rate unchanged at 17 percent.

The Governor of the Bank of Ghana, Dr. Ernest Addison said, “The committee noted that the risks to the inflation outlook are subdued in the forecast horizon. While global and domestic developments do not yet pose a threat to inflation in the near term, recent changes in global financing conditions and its impact on emerging market asset classes requires some vigilance”.

Speaking ahead of this month’s announcement, the President of the Association of Ghana Industries, Dr. Yaw Adu Gyamfi intimated to Citi Business News a reduced rate will be conducive for businesses.

“If it comes down, we will feel better but at least it should never go higher than where it is currently. So we are hoping that things will get better. Once the MPC rate stays the same or comes down, it helps the interest rates as well. So we are hoping that Monday’s decision will be to the benefit of many businesses,” he stated.

Meanwhile, the Managing Director of Omnibank, Philip Oti-Mensah justified to Citi Business News why the MPC may not have to increase the policy rate this time around.

As a banker, the interest rate will influence the interest rate at which the bank will lend to its customers.

“I expect the interest rate to remain at the current figure; we don’t expect a further decline because the government is still going in terms of local debts. If there are any other strategies that the government may want to use, then we are yet to determine that. But from what I know, the interest rates may be kept unchanged,” Mr. Oti-Mensah emphasized.