Professor of Economics at the Institute of Statistical, Social and Economic Research (ISSER), Professor Peter Quartey has predicted that the policy rate will remain unchanged at 14.5 percent.
Should the prediction come to pass it will be the seventh consecutive time the rate has remained at that figure since March last year.
The rate is of keen interest to businesses, as it signals the rate at which the Central Bank will lend to commercial banks, and will subsequently influence average lending rates on loans to individuals and businesses.
However, despite the Monetary Policy Rate (MPR) remaining at 14.5 percent for the better part of 2020, average lending rates of commercial banks have not dropped low enough for many stakeholders.
On the 26th of May this year, the Monetary Policy Committee began its 100th quarterly meeting, to review the state of the Ghanaian economy.
The seven-member Monetary Policy Committee, which meets bi-monthly over a three to four-day period to assess current economic conditions and the country’s inflation outlook, will, at the end of their engagement, determine the new policy rate.
Despite a few projections that the policy rate of the Bank of Ghana will go down by the end of the first half of this year to ease the cost of borrowing, it does not seem to be the case because of some perceived risks in the economy.
Professor of Economics at ISSER, Peter Quartey told Citi Business News that the policy rate will remain unchanged because of developments within the economy in the last couple of months, which do not support a reduction in the base lending rate.
“The factors that they normally look at are the exchange rate, inflation expectations and even economy, as in whether there is overheating in the economy and debt, and many other things. Looking at the fundamentals and judging from the way the exchange rate has been relatively stable, inflation is likely to inch up marginally and I don’t see much overheating in the economy. My expectation is that the policy rate will be maintained again”.