Bank of Ghana’s Monetary Policy Committee (MPC) has slashed its benchmark monetary policy rate down from 28% to 25%, which is one of the most significant reductions in recent years.
Governor of the Central Bank, Dr Johnson Pandit Asiama announced the new rate at the 125th MPC press briefing in Accra, attributing it to the continued decline in headline inflation and improvements in the macroeconomic environment.
“The MPC, by a majority decision, voted to lower the monetary policy rates by 300 basis points to 25%. Looking ahead, the Committee will continue to assess incoming data and likely reduce the policy rate further should the disinflation trend continue,” the Governor told journalists.
Ghana’s inflation rate currently stands at 13.7%, which is notable drop from earlier levels, and signals the effectiveness of recent monetary and fiscal policy coordination in stabilising prices.
The reduction in the policy rate is expected to ease lending conditions in the economy, potentially lowering borrowing costs for businesses and households. It also reflects growing market confidence in the disinflation process, amid relative stability in the foreign exchange market and improved fiscal discipline.
Dr. Johnson Asiama however admitted that, despite the continuous disinflation process, there are still underlying risks which the Central Bank will be monitoring keenly.
Meanwhile, industry analysts believe the move by the MPC could spur private sector investment and support ongoing economic recovery efforts.
