The Bank of Ghana has maintained the policy rate at 17 percent.
This was after 85th regular meeting of the Monetary Policy Committee (MPC) of the central bank met for the final time for 2018
The policy rate is the rate at which the Bank of Ghana lends to commercial bank.
The policy rate has an effect on interest rates over a period of time.
Speaking at a press briefing the Governor of the Bank of Ghana, Dr. Ernest Addison explained that the decision was taken looking at the significant gains made to reduce inflationary pressures.
“Inflation is forecasted to remain within the medium-term target band, the latest assessment shows that there are underlying pressures including risks from the continuing escalating global trade tensions, steady rise in global inflation, further hikes in US interest rates, and a stronger US dollar. On the downside, the recent significant decline in crude oil prices since mid-October 2018 by about 24 percent could lower ex-pump prices, and help moderate the risks going forward,” he said.
Dr. Addison stated that the central bank is hoping to keep all major indicators in check to prevent any slippages.
The central bank has reduced the rate by 900 basis points since 2016 as the inflation rate halved.
Touching on the financial system, Mr. Addison stated that the banking sector, continues to be sound, well-capitalized and resilient.
“Recent stress tests of the banking sector showed across board improvements in the system’s resilience, even though some residual risks remain due to high NPL ratios, relatively high level of concentration of exposures in a few banks, related party exposures, weaknesses in some specialised deposit-taking institutions, and the high level of interconnectedness both among group structures and across the various sub-sectors in the financial sector”.
He noted that on-going reforms by the Bank of Ghana, including supervisory vigilance and strict enforcement of prudential regulations, are expected to address these residual risks, restore confidence in the financial sector, and should bolster the capacity of banks to lend to support the growing Ghanaian economy.
citinewsroom.com