Ghana central bank slashes benchmark interest rate
3/27/2017 6:36:57 PM
Rate decrease magnitude, not suspected.
Ghana's central bank slashed its benchmark interest rate on Monday by two percentage points to 23.5 percent noting signs that inflation was trending downwards, in a move that may help spur lending and business activity.
Ghana was for years one of Africa's fastest-growing economies but growth slumped in 2014 due to falling commodities prices, high inflation and fiscal problems such as a big budget deficit and public debt. As inflation eases the central bank can lower the cost of borrowing.
Monday's rate cut was the biggest by the bank since December 2006, and follows its 50 basis-point reduction in January.
"The (Monetary Policy) Committee noted that underlying inflation pressures have eased considerably and inflation is projected to trend downwards toward the medium term target," Bank of Ghana Governor Nashiru Issahaku told a news conference.
The central bank has a medium-term inflation target of no more than 8 percent, plus or minus 2 percentage points.
"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," Issahaku said.
Ghana's new government took power on Jan. 7 and inherited a weak macro-economic position. It says stabilizing the national finances is a top priority and a prerequisite for restoring rapid economic growth.
Inflation stood at 13.2 percent in February, but the government said it is confident it can meet its 2017 end-year inflation target of 11.2 percent.
An International Monetary Fund programme aimed at helping Ghana stabilize its economy is set to end next year.