The Monetary Policy Committee of the Bank of Ghana (BoG) has cut its lending rate to 29.0% from 30%.
This was made known by the Chairman of the Committee, Dr Ernest Addison, after its 116th meeting on January 29, 2024.
According to him, the decision was made following a steady decline in inflation from 54.0% in December 2022 to 23.4% in December 2023, though there are downside risks.
“The latest forecast suggests that the disinflation process will continue, and headline inflation is expected to ease to around 13-17% by the end of 2024 before gradually trending back to within the medium-term target range of 6-10% by 2025. These forecasts notwithstanding, there are upside risks to the inflation outlook, and there is a need for strict implementation of the 2024 budget and a tight monetary policy stance to sustain the disinflation process”.
“The Committee noted the emerging recovery but sees the need to maintain a strong policy stance to consolidate the disinflation gains. Under these circumstances, the committee decided to reduce the Monetary Policy Rate by 100 basis points to 29.0%”, the Governor added.
The policy rate is a key tool for checking inflation and enabling a positive effect on the cost of borrowing in the country.
The Ghana National Chamber of Commerce and Industry (GNCCI) advocated a reduction in the policy rate to bolster business growth amidst rising borrowing costs.
On the domestic economy, the Governor said there were clear indications that the current macroeconomic framework being implemented with the support of the International Monetary Fund (IMF) programme yielded positive results, adding that the macroeconomic fundamentals have all trended in the right direction.
Overall, the MPC noted that global growth had remained relatively subdued in 2023, while the ease in global inflation had triggered a pause in monetary policy tightening across key economies.