In a very significant development, the Monetary Policy Committee (MPC) of the Bank of Ghana has cut the country’s policy rate by 200 basis points.
The reduction by 200 basis points has lowered the policy rate from 29% to 27%.
This latest decision was announced by the Committee led by the Governor of the Central Bank, Dr. Ernest Yedu Addison at the 120th MPC Press Conference on Friday, September 27.
The policy rate has been maintained at 29% since January 2024 due to inflationary and exchange rate pressures.
This new decision, the Governor explains was necessitated by the improvement in the domestic economy which is showing signs of growth and further favored by global developments.
“Macroeconomic conditions have generally improved. Growth has picked up, headline inflation is dropping, and the disinflation process remains on track, while monetary conditions remain tight,” Dr. Addison said.
The committee’s decision to lower the rate is a clear signal of confidence in the ongoing economic recovery efforts. By easing the policy rate, the central bank aims to stimulate borrowing and investment while continuing to keep inflation under control.
Fitch Solutions early in August predicted that the Bank of Ghana is likely to reduce its benchmark policy rate by 200 basis points (bps) before the close of 2024.
Also, Economist at the University of Ghana Dr. George Domfeh earlier predicted to The High Street Journal that the MPC is likely to reduce the rate should the inflation trend continue.
This reduction is expected to provide much-needed relief to businesses and consumers alike. A reduced policy rate is expected to reflect in reduced and affordable cost of credit creating room for further economic growth.
