BoG cuts policy rate to 13.5%, first time since March 2020

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In its quest to review developments in the economy and take the necessary steps to ensure financial and economic stability, the Monetary Policy Committee of the Bank of Ghana has reduced the policy rate to 13.5 percent.

This is a 100 basis points reduction in the rate which had been kept unchanged at 14.5% percent for at least six consecutive times.

The policy rate determines the rate at which the central bank lends to commercial banks, which also determines how much interest people pay on their loans.

The Monetary Policy Committee, MPC, after concluding its meeting on Monday (March 31, 2021) said the decision was informed by the improvement in macroeconomic conditions on the global front and the local front.

With a reduction in the policy rate, lending rates by commercial banks to businesses is expected to fall in line with the new policy rate.

The Monetary Policy Committee (MPC) of the Bank of Ghana has for the first time since March 2020, , reduced the policy rate to 13.5% after it was kept unchanged at 14.5 percent for at six consecutive times.
The rate had been maintained in May, July, September and November of 2020, and January and March of 2021, following the impact of COVID-19 on the economy.
Here is the Governor of the Central bank, Dr. Ernest Addison giving a justification for the lowering of the Monetary Policy Rate which indicates the rate at which the Central Bank lends to commercial banks and ultimately influences interest rates on loans to businesses and individuals

Source: Citi

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