Accra, Ghana//-The Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) today slashed its policy rate to 13.5 percent from 14.5 percent for the first time since March 2020.
The slash in the rate indicated a 100 basis points reduction which had been remained unchanged at 14.5% percent for at least six consecutive times.
Explaining why the reduction of the policy rate, the Governor of BoG, Dr Ernest Addison said: “Since the last meeting in March 2021, global growth momentum has strengthened, underpinned by the continued policy support, mass vaccinations, and relaxation of restrictions, especially in advanced economies.
These efforts have helped to improve prospects of a rebound in economic activity, and which has been reflected in the revised IMF April 2021 global growth projections to 6.0 percent, up from 5.5 percent in the January
2021 projections”.
The policy rate is the rate at which the central bank lends to commercial banks in the country. With the reduction of the rate, all the banks are expected to reduce their interest rates accordingly.
He added that headline inflation eased sharply to within the medium-term target band, driven mainly by lower food prices and base drift effects, a tight monetary policy stance and stable exchange rate conditions”.
Since the initial shock to inflation in April 2020, the forecast showed that inflation will be close to the central target by June 2021. These forecasts remain broadly unchanged and inflation would remain within the target band in the next quarter.
Risks to the inflation outlook appear muted in the near-term, but pressures from mostly rents and
transport fares, would require some monitoring to anchor inflation expectations, Dr Addison said.
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