MPC begins review of developments in economy

The Monetary Policy Committee (MPC) of the Bank of Ghana is scheduled to begin its regular meetings from yesterday, to Friday, September 25, 2020 to review developments in the economy and take the necessary steps to ensure financial and economic stability.

A statement issued by the bank said “The Committee’s assessment of the situation and interventions shall be communicated accordingly on Monday, September 28, 2020.”

The Monetary Policy Rate is of keen interest to businesses, as it determines the rate at which the Bank of Ghana lends to commercial banks, and subsequently influences the interest rate on loans.

The BoG at its last MPC meeting in July this year maintained the rate at 14.5 per cent.

At that time, the Governor of the Central bank, Dr Ernest Addison, attributed the decision to uncertainties in the economy caused largely by the COVID-19 pandemic.

In March this year, the Monetary Policy Committee (MPC) of the Bank of Ghana, reduced the policy rate to 14.5 per cent.

The rate was maintained in May and July 2020, following the impact of COVID-19 on the economy.

The decision according to the Governor of the Central Bank, Dr Addison, was based on uncertainties in the economy caused largely by the COVID-19 pandemic.

 The President of the Ghana Association of Bankers, Alhassan Andani speaking to Citi Business News ahead of the announcement said he does not foresee an increase in the policy rate anytime soon.

He said that the Bank of Ghana was likely to maintain the monetary policy rate to create an enabling business environment to help struggling Micro, Small and Medium scale enterprises recover from the impact of the COVID-19 pandemic.

“I think the general posture I want to believe will be to ensure that, we can have a quick and easy recovery. And therefore for businesses to access credit for the banks to have liquidity, but because of the slowdown in economic activity, GDP will be up to maybe two per cent. I am sure the posture will be to ensure that the business environment is enabling enough for most of the SMEs and large companies to come back and start productions quickly,” he said.

“The context of doing that is always the supply of credit and how affordable the credit is. So I expect that they will hold the policy rate.  We have seen some bit of pressure on inflation, but the good thing is that it’s still within a range, so I suspect they will keep the policy rate (where it is at the moment),” he said.

He, however, explained that the current state of the economy did not support a decrease in the policy rate.