BoG lowers base rate to 29% to stimulate economic growth

• Posted on January 30, 2024January 30, 2024
• by Nana Kwesi Coomson
• Comment

The Bank of Ghana (BoG) has announced a significant reduction in its Monetary Policy Rate, also known as the base rate, from 30 percent to 29 percent.

This decline of 100 basis points signifies the apex bank’s efforts to boost economic growth and provide relief to businesses.

The decision to lower the policy rate was made during the 116th Monetary Policy Committee (MPC) press briefing on Monday, January 29, 2024. The move comes after a thorough review of the country’s macroeconomic developments over the past two months by the MPC.

One of the main effects of this reduction in the policy rate is the anticipated drop in the lending rates charged by commercial banks to businesses. As the base rate serves as a benchmark for interest rates, lower lending rates are expected to encourage borrowing and investment, thereby stimulating economic activity.

Dr. Ernest Addison, Governor of the Bank of Ghana, explained that the decision to cut the policy rate is supported by the steady decline in headline inflation.

After reaching a high of 54 percent in December 2022, inflation has decreased to 23 percent in December 2023. Dr. Addison also expressed confidence in the anchoring of inflation expectations, with the outlook for inflation continuing to decline.

The BoG’s decision to lower the base rate aligns with the government’s efforts to accelerate economic growth. By reducing the cost of borrowing, businesses will have increased access to capital, allowing them to expand their operations, create more jobs, and contribute to overall economic development.

In conclusion, the BoG’s decision to lower the base rate to 29 percent is aimed at stimulating economic growth and providing relief to businesses in Ghana. This move is expected to result in lower lending rates, boosting borrowing and investment.

By Vincent Kubi