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BoG maintains policy rate at 30%

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The Central Bank has maintained its monetary policy rate at 30%.

Policy rate hikes by the Central Bank since November last year stand at a cumulative figure of 1,300 basis points (13%).

The MPC’s decision to maintain the policy rate is on the back of the 300bps (3%) decrease in the country’s headline inflation rate from 43.1% in July to 40.1% at end-August 2023.

The BoG’s decision to maintain the key benchmark interest rate is in line with the monetary policy tightening stance proposed by the IMF in the implementation of the ECF programme.

Given the pause in the policy rate, interest rates on loans to the private sector are expected to also remain steady. With interest rates on loans being steady, production costs by businesses are expected to largely remain the same.

At the moment, average rates on loans given to individuals and businesses by banks in the country stand at 31.78% at end-August 2023.

This is on the account of increments in the Bank of Ghana’s policy rate which subsequently leads to an increase in the Ghana Reference Rate (GRR) and risk assessment charges on borrowers.

The rise in the average lending rate marks a 3.82% (382bps) year-on-year (YoY) increment in interest rates when compared to the 27.96% average lending rate at end-August 2022.

Announcing the policy rate at the 114th MPC press briefing, the Governor of the Central Bank, Dr Ernest Addison noted that there are broad expectations of a continuous disinflation in the coming months, however, the Bank stands ready to respond appropriately should inflation deviate from the broad disinflation expectations.


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