Bank of Ghana to cut interest rate today

The Bank of Ghana Monetary Policy Committee (MPC) started its quarterly meeting Monday to review the performance of the Ghanaian economy.

Today Friday February 19, 2010 the MPC will meet the press at a press conference and issue a statement. And for the first time, it is certain that the central bank will announce a cut in the prime rate.

The announcement of the prime rate, has always been the highlight of the MPC’s press conferences, often overshadowing all other issues in the economy.

Earlier this year, the governor of the central bank, who will be addressing the media for the second time since he took office has given the indication that because inflation has fallen, interest rates must be cut.

As predicted in December last year when Ghana’s inflation dropped for the sixth consecutive time to 16%, January inflation fell to 14.8%.

But before now, Ghanaian banks have been jostling each other trying to cut down lending rates. The current prime rate stands at 18%, but commercial banks charge around 32% interest.

The Bloomberg News however suggests that the expected cut in the prime rate today, will ease pressure on borrowers who have defaulted on more than one in 10 loans in Ghana.

By Emmanuel K. Dogbevi