Ghana’s apex bank cuts interest rate after President urged commercial banks to curtail interest rates

Ghana’s apex bank Monday said it has reduced its benchmark interest rate to the lowest in four years as inflation is slowing toward the central bank’s target.

According to Ernest Addison, governor of the Bank of Ghana, the interest rate has been reduced by 200 basis points to 18 percent.

Nana Akufo-Addo, Ghanaian President had earlier this month urged the country’s commercial banks to cut their lending rates for clients.

He noted that creditors are failing to pass on lower rates from the central bank and are standing in the way of economic progress.

“The gap between what is happening to the decline in inflation and the lending rates being charged by the private sector is a gap we have to bridge,” Akufo-Addo said. “Lending rates must come down. And they need to
come down as a matter of urgency.”

While inflation stood at 10.6 percent in February, it still exceeded the 6 percent to 10 percent target band, but the rate has almost halved in the last two years and a stable cedi could help rein in price growth even
further.

Experts say lower borrowing costs may further boost expansion in Africa’s fastest-growing economy.