The Association of Ghana Industries (AGI) is anticipating a reduction in the policy rate as the Bank of Ghana prepares to announce its latest monetary policy decision today.
At its previous Monetary Policy Committee (MPC) meeting, the Central Bank raised the benchmark policy rate by 100 basis points to 28 percent, citing ongoing inflationary pressures.
However, AGI Chief Executive Officer Seth Twum Akwaboah believes the conditions are now favourable for a rate cut.
In an interview with the media, he pointed to improving macroeconomic indicators, including the recent strengthening of the Ghana cedi against the US dollar, as justification for a shift in the policy stance.
According to Seth Twum Akwaboah, a lower policy rate could help reduce the cost of borrowing and provide much-needed relief to businesses.
“I think that MPC is always based on parameters and improvement and the macroeconomic environment. Therefore we definitely expect some improvement in that area. The MPC to a large extent determines the interest rate because the banks rely on it.
“With the improvement in the macroeconomic environment, with the improvement in the cedi…the stability we are experiencing, we also expect that policy rate will improve to reflect the interest rate so that companies can benefit and that is the way to reduce cost of production and translate it into lower pricing for businesses. We expect a downward review all things being equal,” he said