Prof. Godfred Bokpin, a finance lecturer at the University of Ghana Business School, believes that it might be premature for commercial banks in Ghana to lower their lending rates in direct response to the recent decline in inflation rates.

Bokpin's viewpoint comes after the Bank of Ghana urged commercial banks in the country to decrease their lending rates, given the ongoing decrease in inflation figures.

While Bokpin acknowledges the positive nature of this call, he emphasizes the significance of the Bank of Ghana's policy rate and how it may evolve in the upcoming months.

According to Prof. Godfred Bokpin, if the central bank in Ghana is confident that the disinflation process has taken hold and will decline significantly, it should be reflected in the policy rate and treasury bill rate.

Bokpin emphasized the importance of three key variables in Ghana's reference rates: the policy rate, treasury bill rate, and interbank rate.

He argues that if the lending rate set by the Bank of Ghana for commercial banks does not experience a significant reduction in line with the decrease in inflation, then the central bank lacks the moral authority to expect commercial banks to take greater actions than it is willing to undertake itself.

“Generally we will say it is a good call but to the extent that it is coming from the Bank of Ghana is even more interesting. The question will be how will bank of Ghana’s policy rate respond in the next couple of months. Because if it is the considered view of the central bank that the process of disinflation has become entrenched and will come down sharply, then that should also reflect in the policy and treasury bill rate.”

“There are three variables that are very important in the Ghana reference rates coming down. The policy rate, treasury bill rate and the interbank rate. So if the rate at which Bank of Ghana itself will be lending to the commercial banks does not come down drastically to reflect the reduction in inflation, it does not have the moral right to ask commercial banks to do more than it is willing to do.”

Inflation has dropped to 41.2 percent for the month of April 2023.  This represents a 3.8 percentage point decrease from the 45.0 percent recorded in March 2023.

This was captured in the Consumer Price Index (CPI) data released by the Ghana Statistical Service (GSS) on Wednesday, May 10, 2023.

Per the data, food inflation also stood at 48.7 and Non- food inflation 35.4 %.