19.1 C
Tuesday, July 5, 2022

MPC set to fix policy rate


The Monetary Policy Committee of the Bank of Ghana (BoG) is expected to announce the policy rate on Friday.

The policy rate influences interests charged by commercial banks on loans given customers.

The MPC will be making the announcement after having deliberated, since Monday, on developments that have taken place in the economy over the past months.

Against the backdrop of two consecutive dips in inflation for February and March, the bank will have a lot to consider deciding whether the policy rate should be reduced again, maintained or even adjusted upwards.

It stands to reason for one to assume that going by the bank’s promise the policy rate would be reduced.

The last reduction of 200 basis points in February was the biggest cut in three years but the bank says there won’t be a cut like this in a while, which means not this time.

The fall from 14.23 percent in February takes the inflation rate closer to an official target of single-digit price growth by the year-end, when the West African economy faces an influx of oil money from major offshore finds due to come on stream.

The central bank already shaved two percentage points off the prime rate in February, taking it to a 20-month low of 16 percent, and its rate-setting committee is due to announce its next move on Friday.

“We expect the central bank to cut rates by 50-100 basis points on Friday, and likely follow that up with a further cut in June,” said Lisa Lewin of London-based Business Monitor International.

Markus Schneider of UBA predicted the central bank would keep rates on hold on Friday and wait until the downward inflation trend had brought price growth into single digits, which he though possible in the second quarter.

“However we do expect a further 200 basis points of cumulative cuts in the next three quarters to bring the prime rate to 14 percent,” he added.

Prices of non-food items rose by an annualised 17.55 percent in March while food items gained just 7.35 percent, the statistics office said.

Latest news
Related news