The Monetary Policy Committee of the Bank of Ghana has reduced the policy rate to 23.5 percent
Governor of the Central bank, Dr. Abdul Nashiru Issahaku disclosed this at the press briefing to conclude the second MPC meeting for 2017.
According to the governor of the central Bank, the headline inflation declined for the fifth consecutive month in February 2017.
Inflation fell from 17.2 percent in September 2016 to 15.4 percent in December and further down to 13.2 percent in February 2017.
This resulted in the decline of the policy rate.
"The Bank said its latest forecasts indicate a continued downward trend towards the medium term inflation target of 8±2 percent in 2018".
He added, “Recent developments in inflation imply money increasing tightening consequently the MPC has decided to reduce the policy rate by 200 basis points to 23.5 percent.”
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The Governor further noted that the confidence of an improved inflation and indication of low growth warranted a reduction of the policy.
“However there are indications that growth is likely to remain significantly below potential which alongside an improved inflation outlook, provides some scope for monetary policy easing.”
This is the second time that the MPC has reduced the policy rate after keeping it unchanged at 26 percent for a greater part of 2016.
The policy rate is the rate at which commercial banks borrow from the central bank for onward lending to their customers.
The Committee said it will continue to monitor developments and take appropriate action necessary towards the attainment of its inflation target.
The next Monetary Policy Committee (MPC) meeting is scheduled for May 19, 2017. The meeting will conclude on May 22, 2017 with the announcement of the policy decision.