Interest On Loans To Increase Further As Bank of Ghana Increases Policy Rate Today

financial sector complaint

Interest On Loans To Increase Further As Bank of Ghana Increases Policy Rate Today

Interest on loans to increase further as the Bank of Ghana increases the monetary policy rate to 29.5% effective today, 27th March 2023.

The monetary policy rate is the rate at which the Bank of Ghana lends money to financial institutions in the country. Commercial banks in the country usually demand loans from the central bank for several reasons, including the need to shore up liquidity challenges.

The fact, therefore, is that the commercial banks can not provide loans to their customers at an interest lower than the interest the bank has to pay the central bank.

According to the central bank, the decision to increase the monetary policy rate is because inflation pressures are still rife despite the marginal decline in inflation over the past two (2) months. Inflation peaked at 54.1%. December 2022. However, inflation declined to 51.8% in February 2023. The central bank considers the current inflation as significantly higher than the medium term target of plus or minus 8% inflation target.

See also: March 2023 Monetary Policy Committee Meeting Ended Today | Effect of BoG lending rate on loan interests

The central bank therefore increased the monetary policy rate by one hundred and fifty basis points (150 basis points) to 29.5%. The previous monetary policy rate was 28%.

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