EIU predicts reduction of lending rates by Bank of Ghana

The Economist Intelligence Unit (EIU) has predicted that the Bank of Ghana (BoG) will lower its lending rate this year.

In its latest country report, the business intelligence advisory projected that the central bank’s policy rate which presently stands at 16% may be reduced further as inflation has declined the more.

This should be a breath of fresh air to businesses and individuals seeking loans from commercial banks this year since the last time there was a reduction of the policy rate was in January 2019.

In the report, the EIU said inflation is set to be moderate after being high throughout 2019.

After which the committee has met 5 times and kept the rate unchanged as inflation remained volatile.

Meanwhile, the firm argues that given the slowdown in inflation, there will be grounds for BoG to reduce its interest rate as it tries to support lending to the private sector.

Ghana’s inflation currently stands at 8.2% but the EIU predicts that the rate will largely remain unchanged throughout the period.

The Monetary Policy Committee in its last meeting unveiled a number of measures it hopes to undertake in to further reduce the high cost of lending.

According to the central bank, data presented to the Committee revealed that factors such as high operating costs of banks stemming from operational inefficiencies among others, when addressed would help lower lending rates.