The Monetary Policy Committee of the Bank of Ghana will begin its 101st meeting from today.
The meeting which will look into various developments in the Ghanaian economy will end up with a decision on the Policy Rate – the rate at which the commercial banks borrow from the Central Bank.
It is however unlikely that the Policy Rate will be altered at its present 13.5%, based on developments in the economy. The Committee had cut down the base lending rate by 1% in the last meeting in May 2021.
The reduction in the Central Bank’s key lending rate was targeted at stimulating economic activity through lending.
The MPC will also assess the Central Bank’s Composite Index of Economic Activity as well as the Business and Consumer Confidence indicators. It will also make projections for inflation and exchange rate, as well as proffer advice to the central government on measures to tackle the nation’s rising debt and improve the fiscal balance.
BoG cuts policy rate to 13.5%
The Bank of Ghana attributed the decision to cut the policy rate in May 2021 to pick up in economic activities and recovery towards pre-pandemic levels.
“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”.
The move was expected to reduce the cost of credit and stimulate economic growth.