The Bank of Ghana has cut the policy rate to 29.0%
The Monetary Policy Committee of the Bank of Ghana has lowered its lending rate from 30% to 29.0%
The Chairman of the Committee, Dr Ernest Addison, made this known during its 116th meeting on January 29, 2024.
The decision was taken following a steady decline in inflation, from 54.0% in December 2022 to 23.4% in December 2023, despite the inherent dangers.
“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”.
Dr Addison Chairman of teh Bank of Ghana explained that several factors had supported the disinflation process, including the tightening monetary policy stance throughout 2023, favourable international crude oil prices which led to stable ex-pump prices and transportation costs, and relative stability in the exchange rate.
“The latest forecast suggests that the disinflation process will continue, and headline inflation is expected to ease to around 13 and 17 per cent by the end of 2024 before gradually trending back to within the medium-term target range of 6-10 per cent by 2025,” he said.
The Governor, however, noted that there could be upside risks to the inflation outlook, hence, the need for strict implementation of the 2024 budget and a tight monetary policy stance to sustain the disinflation process.
In the banking sector, Dr Addison stated that the bank’s liquidity and profitability positions had improved in the aftermath of the domestic debt restructuring.
“It is expected that early recapitalisation and effective risk management by banks will help promote overall banking sector stability and resilience and ensure effective financial intermediation to strengthen the economic recovery efforts,” he said.
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.
MORE STORIES: CAGD Salary Payment | The Controller set payment dates for 2024
Speaking about domestic macroeconomic conditions, he indicated that there had been a gradual recovery in economic activity, due to the positive results of the International Monetary Fund (IMF) Extended Credit Facility (ECF) programme.
“Growth, however, remains below potential, requiring policy support, including help from the supply side,” he said.
Send Stories | Social Media | Disclaimer
Send Stories and Articles for publication to [email protected]
We Are Active On Social Media
WhatsApp Channel: JOIN HERE
2024 BECE and WASSCE Channel - JOIN HERE
Facebook: JOIN HERE
Telegram: JOIN HERE
Twitter: FOLLOW US HERE
Instagram: FOLLOW US HERE
Disclaimer:
The information contained in this post on Ghana Education News is for general information purposes only. While we endeavour to keep the information up to date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the website or the information, products, services, or related graphics contained on the post for any purpose.