Policy rate down to 21%

Policy rate has been reduced to 21 per cent, thus a 150 basis point. This is the fourth time in the year that the Monetary Policy Committee (MPC) of the Bank of Ghana has reduced its policy by 150 basis points to 21 per cent from 22.5 per cent.

Governor of the Bank of Ghana, Dr. Ernest Addison, said the move was influenced by the improvement of economic activity in the country.

The policy rate is the indicative rate the Bank of Ghana lends to commercial banks. It attributed the reduction to the improvement in economic activity supported by a rebound in crude oil production and the implementation of fiscal policy measures towards providing stimulus through the key initiatives contained in the 2017 budget statement.

Despite the reduction in the policy rate, and the downward trend in other interest rate variables, banks are yet to respond in lowering their cost of lending to businesses.

This situation the governor of the central bank attributed to the current high levels of Non Performing Loans and cost of operations by banks.