Bank of Ghana maintains policy rate at 16 percent, here’s how this can reflect in your pocket

Bank of Ghana maintains policy rate at 16 percent, here’s how this can reflect in your pocket

[html]Ghana’s central bank, the Bank of Ghana (BoG) has maintained its policy rate at 16 percent for the second time running.
   
   
   
       
       
           
               
                   

Ghana’s central bank, the Bank of Ghana (BoG) has maintained its policy rate at 16 percent for the second time running.

               
           
               
                   

The Governor of the BoG, Ernest Addison told reporters Monday, May 27, 2019, at the Monetary Policy Committee’s (MPC) press briefing held in Accra.

               
           
               
                   

According to him, the MPC’s decision became necessary to sustain the gains the committee had made over the past two or more years.

               
           
               
                   

He mentioned that the exchange rate performance since the beginning of the year put pressure on the prices of goods and services and the BoG’s decision was to keep its rate unchanged to ensure that inflation does not inch up further.

               
           
               
                   

On the inflation outlook, the Governor noted that “the recent exchange rate pass-through has slowed the disinflation process, leading to a slightly elevated inflation profile as shown in the latest forecasts. However, core inflation remains subdued and inflation expectations fairly anchored,” adding that, “Under the circumstances, the Committee decided to keep the monetary policy rate unchanged at 16 percent. The Committee will continue to closely monitor both global and domestic developments and stands ready to take appropriate measures if necessary, to maintain price stability.”

               
           
               
                   

Here's how this can reflect in your pocket

               
           
               
                   

The Borrower

               
           
               
                   

The borrower who is seeking to raise some funding through credit, maintaining the policy rate, to a large extent implies that Bank lending rates will remain unchanged, hence no increase in the cost of borrowing.

               
           
               
                   

However, there are other factors that may trigger an increase in bank lending rates irrespective of the policy rate being unchanged.

               
           
               
                   

Borrowers (individuals or businesses) should also be aware that they may incur other costs like loan monitoring fee, processing fee and cash locked up as collateral, which could still make the cost of borrowing quite significant.