New policy rate: BoG moves to encourage banks to fastrack cuts in interest rates 

Bank of Ghana, BoG will by the end of this week hold a series of meetings with some Chief Executives of banks in the country.

This is to encourage banks to act on the recent policy rate cut. 

The meeting according to reports will be with some commercials banks in order for them to quickly reduce their lending rates in line with the new policy rate.

The BoG said they will not compel the commercial banks to do so but rather a way to persuade them.

The Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) last month reduced the policy rate from 14.5 per cent to 13.5 per cent.

The reduction as a result of the improvement in macroeconomic conditions on the global front and the local front.

On the domestic front, economic activities have picked up strongly, evidenced by the high frequency economic indicators. Consumer and business confidence softened, triggered by the new revenue measures and recent instability in power supply which coincided with the survey period.

These have served to dampen sentiments but are viewed as temporary and should improve in the near-term. Private sector credit growth still remains below prepandemic levels but “we expect banks to respond to the observed emergence of increased demand for loans to support the expected pickup in economic activity.

“The banking sector remains sound and profitable, with adequate levels of capital and liquidity to withstand moderate to severe shocks,” the committee said.

The industry has witnessed sustained growth in deposits, total assets, profits, and shareholder funds. The COVID–19 policy and regulatory response measures have somewhat helped to mute the effect of the pandemic
on corporates and households and are being maintained in the near-term.