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Benchmark lending rate plunge by a lot more than expected

The Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) has significantly reduced its key lending to commercial banks, the biggest cut in rate in almost 10 years to 22.5%

___6725476___https:______static.pulse.com.gh___webservice___escenic___binary___6725476___2017___5___23___20___Dr-Ernest-Addison-BoG

The Monetary Policy Rate (MPR) is a monetary policy tool of the BoG and it is the rate at which commercial banks can borrow from the central bank.

It communicates the monetary policy stance of government, influence money supply and also guide market interest rates.

Dr. Addison, speaking at a news conference in Accra, said that although inflation rose marginally in April to 13 percent from 12.8 percent in March, inflation expectations have broadly trended downwards.

According to him, the process to fetter inflation was supported by the bank’s tight monetary stance as well as stability in the exchange rate regime.

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The bank insists that its forecast horizon for inflation remains unchanged and inflation is expected to trend downwards the medium target of 8±2 next year.

“With a stable outlook for exchange rate movements and return to the path of fiscal consolidation, headline inflation is expected to trend towards the medium-term term target in 2018, barring any unanticipated shocks.

The 2017 budget, according to Dr. Addison, indicates a return to the path of fiscal consolidation. With government forecasting a reduction in budget deficit from about 9 percent to about 6 percent, the governor argued that such reduction is expected to foster more stable macro-economic condition, adding that that rigorous implementation of the budget will therefore be critical to the outlook.

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