The Bank of Ghana (BoG) has announced a 200-basis-point reduction in its Monetary Policy Rate, lowering it to 27%.
This is the second rate cut since 2021, aimed at providing relief to borrowers and reflecting the easing of inflationary pressures.
The policy rate had been kept at 29% for nine months, following a reduction from 30% in January this year.
The decrease in the rate is expected to offer borrowers some form of respite at least for the next two months.
Addressing the 120th Monetary Policy Committee press briefing on Friday, September 27, Bank of Ghana Governor, Dr. Ernest Addison said the softening of the policy rate is to reflect the recent ease in inflation and improvements in the economy.
“In the assessment of the Committee, preliminary data since the last MPC meeting held in July 2024 indicates that macroeconomic conditions have generally improved. Headline inflation has eased, and growth has picked up.
“Fiscal policy implementation has been robust, providing impulse that is supportive of growth, while monetary conditions have remained tight and supportive of the disinflation process.”
“Headline inflation, since the first quarter, has declined for five consecutive months by 5.4 percentage points. Core inflation has also declined sharply over the same comparative period by 6.9 percentage points. These trends suggest that the disinflation process is on course.”
“The latest forecasts show that inflation will continue to ease towards the range target of 13-17 per cent for the year and steadily track back towards the medium-term target of 6-10 per cent by the end of 2025, barring unanticipated shocks. At the current juncture, the committee judged the risks to the inflation outlook as fairly balanced.”
“Given these considerations, the Committee decided to lower the Monetary Policy Rate by 200 basis points to 27.0 per cent.”
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