The Monetary Policy Committee of the Bank of Ghana (BoG) has announced a reduction in its key lending rate from 30% to 29.0%.

Chairman of the committee, Dr. Ernest Addison, made this announcement following the 116th meeting.

Dr. Addison mentioned that the decision to cut the lending rate was influenced by a consistent decline in inflation, which fell from 54.0% in December 2022 to 23.4% in December 2023. However, he also noted that there are downside risks despite the positive trend in inflation.

"The latest forecast suggests that the disinflation process will continue, and headline inflation is expected to ease to around 13-17% by the end of 2024, before gradually trending back to within the medium-term target range of 6-10% by 2025. These forecasts notwithstanding, there are upside risks to the inflation outlook and there is need for strict implementation of the 2024 budget and a tight monetary policy stance to sustain the disinflation process".

"The Committee noted the emerging recovery but sees the need to maintain a strong policy stance to consolidate the disinflation gains. Under these circumstances, the Committee decided to reduce the Monetary Policy Rate by 100 basis points to 29.0%", the Governor added.

Prior to the recent information, the Ghana National Chamber of Commerce and Industry (GNCCI) advocated for a reduction in the policy rate to support business growth.

In a statement, the GNCCI highlighted that Ghanaian businesses are grappling with a significant increase in borrowing costs, mainly due to the high Monetary Policy rate.

It emphasized that the elevated interest on commercial loans, averaging 32.0% in 2023, compounds the already high utility tariffs and excessive taxes, making the cost of doing business in Ghana exceptionally high.