[ 2017-05-22 ]

The Bank of Ghana (BoG) has reduced the Policy Rate by 100 basis point

BoG reduces policy rate to 22.5%
The Bank of Ghana (BoG) has reduced the Policy
Rate by 100 basis point, indicating a drop in the
rate from 23.5 percent to 22.5 percent.

The figure was announced by the Governor, Dr.
Ernest Addison after supervising his maiden
Monetary Policy Committee(MPC) meeting, following
his appointment to the central bank in March.

Before this, the former governor, Dr. Abdul
Nashiru Issahaku announced a 200 basis point
reduction from of 25.5 percent to 23.5 percent in
March. This is the second time in this year that
the central bank has reduced the Policy Rate.

Addressing journalists at the Bank of Ghana, Dr.
Addison cited the stable inflation among others as
reasons for the reducing the policy rate.
He added that the downsize risk is lower compared
to high size risks in relation to the stability of
the cedi.

“There are indications that growth is likely to
remain significantly stable, alongside an improved
inflation outlook, provides some scope for
monetary policy easing,” he said.

“On inflation, the Committee noted that headline
inflation, and inflation expectations have broadly
trended downwards.The disinflation process has
been supported by tight policy stance and exchange
rate stability,” he added.

Dr. Addison pointed out that with the stable
outlook for exchange rate movements and the return
to the path of fiscal consolidation, headline
inflation is expected to trend towards the
medium-term target in 2018, barring any
unanticipated shocks.

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

Source - citibsinessnews.com

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