BoG must consider reducing policy rate – Ebo Turckson

60696521.295Some economists are predicting the Monetory Policy Committee (MPC) of the Bank of Ghana (BOG) may maintain the monetary policy rate.

According to Dr. Ebo Turckson, the current inflationary trends, high interest and cost of government borrowing will make it difficult for the MPC to reduce policy rate.

The last meeting of the MPC increased the policy rate by 100 basis point to 25 percent from 24 percent.

Speaking to Citi Business News ahead of this month’s MPC meeting Economist and Senior Lecturer at the University of Ghana Dr. Ebo Turckson said the Bank of Ghana must consider reducing the rate to reduce high interest rate.

“The role of the monitoring committee meeting will be more concerned about the interest rate hikes and therefore their target would be beyond inflation. If in their estimation and as the figures would show inflation is toned down then I believe that if it is possible for them they should reduce the rate so that it would have an impact on interest rate so that the private sector can borrow but then perhaps if they would have to balance the rate of inflation. But given the way the government is behaving am not too sure if the central bank would want to reduce the rate of interest.”

The policy rate is used by commercial banks to calculate their base rates and industry players fear a hike will lead to an increase in interest rates which hover around 35 to 40 percent on the average. November’s meeting is also expected to focus on the economy proper and the cedi which has seen some significant improvement following the coming in of the 1 billion dollar Eurobond, cocoa syndicated loan and some 995 million cedi bond into the economy.

The meeting will conclude with a press conference on Monday November 16, 2015 to announce the decision of the MPC on the appropriate positioning of the Bank’s policy rate.

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