Ghana’s central bank reduces policy rate to 16 percent

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Ghana’s central bank has reduced the country’s policy rate to 16 percent representing a 100 basis points.

In March 2018, the Bank reduced its rate by 200 basis points from 20 percent to 18 percent.

The Monetary Policy Committee of the bank noted that the immediate risks to the disinflation path were well contained and the current conditions provided scope to translate some of the gains in the macro stability to the economy.

Speaking at press conference after the 86th Monetary Policy Committee Meeting in Accra, Governor of the Bank of Ghana, Dr. Ernest Addison, said the Committee also noted that inflation has steadily declined from 15.4 per ent at the end of 2016, to 11.8 percent in 2017 and further down to 9.4 percent in 2018, supported in large part by non-food inflation.

The policy rate is the rate at which the central bank lends to commercial banks for onward lending to their customers.

He said the Bank’s latest forecast shows that inflation will remain within the target band of 8±2 percent over the forecast horizon, barring any unanticipated shocks.

He added that the Committee observed that the year 2018 ended on a solid note with a more consolidated banking sector as weaker and under-capitalised banks that posed risks to financial stability were removed.

“This enhances the efficiency and profitability of the remaining banks and has restored confidence and resilience in the banking sector, with the banks now better positioned to support private sector-led growth in the Ghanaian economy,” Dr. Addison said.

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