Loans to Become More Expensive as BoG Increases Policy Rate to 24.5%

Source the Ghana Report

The Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) has increased the Monetary Policy Rate (MPR) by 250 basis points, translating to 24.5% from 22% in August.

This implies that borrowing from banks will become more expensive, which will impact the cost of living and doing business in the country.

Addressing the media today, October 6, the Governor of BoG, Dr. Ernest Addison, explained that the Committee decided to check the rising inflation rate as the country negotiates with the International Monetary Fund (IMF) for an economic programme.

He explained that inflation remains elevated, and the balance of risks is on the upside.

Although the forecasts are for monthly inflation to slow down, the risks are on the upside, emanating mainly from pass-through effects of the currency depreciation, the recent upward adjustment in utility tariffs, and rising inflation expectations.

He added that the Committee remains committed to re-anchoring inflation expectations and returning to a disinflation path.

The Committee assesses that the engagement with IMF has been positive and that the early conclusion of the programme discussions will help re-anchor stability.

“The outlook for the Ghana Cedi has improved, aided by the recent disbursement of the loan from Afreximbank of US$750 million, the signing of the syndicated Cocoa Loan of US$1.13 million, and the agreement with gold and oil companies to purchase the repatriated foreign exchange earnings of about US$83.9 million so far, will help stabilise the exchange rate,” he stated.

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