The Bank of Ghana (BoG) has reduced the policy rate to 17 percent. This represents a 100 basis points reduction in the policy rate which was at 18 percent.

Today’s announcement comes after the central bank reduced the rate from 20 percent to 18 percent in March this year.

The announcement was made after the Monetary Policy Committee (MPC) of the Bank of Ghana met on Friday [18th May, 2018].

The policy rate is the rate at which the central bank lends to commercial banks for onward lending to their customers.

The Governor of the Bank of Ghana, Dr. Ernest Addison stated at a press conference that the reduction is aimed at achieving lower inflation target.

According to Dr. Addison, “the committee noted that the risks to the inflation outlook are subdued in the forecast horizon. While global and domestic developments do not yet pose a threat to inflation in the near term, recent changes in global financing conditions and its impact on emerging market asset classes requires some vigilance”.

He explained that, the committee consequently, decided to reduce the monetary policy rate by 100 basis points to 17 percent.

Giving some more reasons, Dr. Addison stated that headline and core inflation have broadly trended downwards, indicating easing underlying inflation pressures.

“Additionally, weighted inflation expectations across the sectors have continued to decline. Headline inflation trended within the medium-term target of 8±2 percent and the forecast points to sustained disinflation over the horizon, barring unanticipated shocks,” he said.

 Source: citibusinessnews.com