Bank of Ghana cuts Monetary Policy Rate to 27%

Sep 27, 2024 - 16:46

Dr. Ernest Addison is Governor of Bank of Ghana.

Accra, Ghana - The Bank of Ghana (BoG) has announced a 200-basis-point reduction in its Monetary Policy Rate, lowering it to 27%, marking the second rate cut since 2021.

This move aims to provide relief to borrowers and reflect the easing of inflationary pressures.

The rate had been maintained at 29% for nine months, following a reduction from 30% in January this year.

Addressing the 120th Monetary Policy Committee press briefing on Friday, September 27, Bank of Ghana Governor, Dr. Ernest Addison stated that the decision to soften the policy rate is a response to the recent ease in inflation and improvements in the economy.

“In the assessment of the Committee, preliminary data since the last MPC meeting held in July 2024 indicates that macroeconomic conditions have generally improved. Headline inflation has eased, and growth has picked up.

“Fiscal policy implementation has been robust, providing impulse that is supportive of growth, while monetary conditions have remained tight and supportive of the disinflation process.”

“Headline inflation, since the first quarter, has declined for five consecutive months by 5.4 percentage points. Core inflation has also declined sharply over the same comparative period by 6.9 percentage points. These trends suggest that the disinflation process is on course'', he stated.

This decrease is expected to offer borrowers some respite, at least for the next two months. The move is seen as a positive step towards supporting economic growth and stability.

Ghana's inflation rate has been trending downward, with the year-on-year inflation rate standing at 25.8% in March 2024, down from 23.2% in February 2024. The central bank's medium-term target is to keep inflation within the 8±2 percent range.

The International Monetary Fund (IMF) has also approved a 36-month Extended Credit Facility program for Ghana, aimed at restoring macroeconomic stability and debt sustainability. This program is expected to support Ghana's economic recovery efforts.

Source: Lead News Online