Banks in Ghana to readjust interest rates to reflect the drop in the policy rate

The banks are expected to readjust their interest rates after the Monetary Policy Committee of the Bank of Ghana reduced the rate at which it lends to commercial banks by 1.5%; from 16% to 14.5%.

The Bank of Ghana (BoG) explained that the 150-basis points reduction in the rate which had been kept unchanged at 16% for at least five consecutive times, was because of global developments due to the COVID-19 pandemic.

The drop is expected to lead to a drop-in lending rates by commercial banks. But the Managing Director of Republic Bank, Farid Antar, in an interview with Accra-based Citi FM, said that they will respond when all other factors of setting interest rates have been taken into consideration.

“Well I know we have done some of our calculations and we have intervened how much, and what necessary movement we would be able to take. I think that with the sort of pressure in the industry, especially in the markets, we may need to bring it down a little bit more so we are working on an amount to see what we can afford, but we have not yet made that announcement.”

Republic Bank is the first financial institution in Ghana to defer loan repayment for workers and customers by six months due to the Coronavirus pandemic.

Policymakers are responding to the global pandemic by putting in place measures that come with difficult economic trade-offs.

Meanwhile, President Akufo-Addo has announced that all households and small to medium scale enterprises are to benefit from a stimulus package of one billion Ghana cedis.

This is part of measures to mitigate the economic impact of the COVID-19 pandemic on businesses.