By 
The Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) has opted to maintain its key lending rate to commercial banks without change.
Following a thorough review of economic developments, the MPC decided to keep the rate steady at 30.0%. Governor of the Bank of Ghana, Dr. Ernest Addison, explained during a media briefing that this decision was driven by the positive response of all macroeconomic indicators to previous measures aimed at controlling inflation.
Dr. Addison stated, “Given these considerations, the Committee decided to maintain the policy rate at 30.0 percent. The Committee further indicated that while the expectation is for continued disinflation, it stands ready to respond appropriately should inflation deviate from these broad expectations.”
Regarding inflation dynamics, Dr. Addison highlighted that the ongoing adherence to a tight monetary policy stance and the relative stability of the exchange rate have played significant roles in the disinflation process observed thus far this year.
He revealed that headline inflation has decreased by a cumulative 14.0% since reaching its peak of 54.1% in December 2022. Additionally, non-food inflation has seen a substantial reduction of nearly 20%, largely reflecting the effectiveness of monetary policy.
Dr. Addison emphasized, “All core inflation measures, monitored by the central bank, are trending downwards, indicating continued easing of underlying inflationary pressures. In addition, one-year ahead survey-based inflation expectations seem well anchored.”
While acknowledging the resumption of the disinflation process, the Governor noted that it is anticipated to gradually lead to a return to the target band over the medium-term, barring any unexpected shocks or significant rises in international crude oil prices and utility tariffs.
In terms of government securities auctions, the rates for the 91-day and 182-day Treasury bills exhibited marginal decreases in August 2023, standing at 26.35% and 27.84%, respectively, compared to 27.68% and 29.12% in the corresponding month of 2022. However, the rate on the 364-day instrument increased to 30.88% from 28.92% over the same comparative period. It’s important to note that all these rates were negative in real terms when considering the inflation rate.
The interbank weighted average rate, representing the rate at which banks borrow from one another, rose to 26.59% in August 2023, up from 21.93% in August 2022, aligning with the increases in the monetary policy rate. Consequently, the average lending rates of banks increased to 31.78% in August 2023, compared to 27.96% recorded in August 2022.
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