Monetary Policy rates in Ghana have been revised downwards to an 8-year low- the central bank of the west African nation announced Wednesday in a bid to address Coronavirus effects on its Economy.
“Monetary policy rate was reduced to 14.5% from 16%, the first cut since January 2019,” Bank of Ghana said in a statement.
According to the statement, Inflation, which measured 7.8% in February, is expected to remain within the target band of 6% to 10% for the next quarter, it said.
By this bold announcement at the height of the global pandemic that has brought the world on its knees, Ghana became the first sub-Saharan Africa country to cut interest rates in response to the Coronavirus pandemic, reducing its benchmark to an eight-year low.
The West African state says it projects that growth in gross domestic product could decline to 5% and could even slow to 2.5% in a worst-case scenario, said the central bank.
Before the pandemic broke out in china, the International Monetary Fund had projected Ghana’s growth at 5.6%.
Last month, Inflation in Ghana had been recorded at 7.8% but the Central Bank said in a statement “is expected to remain within the target band of 6% to 10% for the next quarter.”
Other changes instituted includes lowering reserve requirements for lenders to 8%, from 10% to provide liquidity support to critical sectors.
Conservation buffer for banks is reduced to 1.5% from 3%, which effectively cuts the capital-adequacy ratio to 11.5%, from 13%.
Lowering the cost of fund transfers through mobile money. The central bank will convene further “emergency meetings” when warranted.