The decision by the Monetary Policy Committee of the Bank of Ghana to maintain the policy rate at 14.5 percent is a step in the right direction even as the country’s economy is adjusting to ways to be resilient from the effects of the COVID-19 pandemic.
This is the view of Dr Lord Mensah, an economist.
The Monetary Policy Rate (MPR) is the rate at which the Bank of Ghana lends to commercial banks and subsequently influences interest rates on loans.
It is the third consecutive time the policy rate has been maintained at that figure for this year.
At the 96th MPC Press Conference on the 28th of September 2020, the Governor of the Central Bank of Ghana, Dr. Ernest Addison, announced that the MPR has been maintained at 14.5 percent,
In an interview with Citi Business News, Dr Lord Mensah said the approach of the Christmas season, as well as the upcoming general elections, will result in some level of uncertainty in the country’s exchange rate and therefore maintaining the rate is crucial for the economy at this time.
“With COVID-19 and looking at the easing of economic activities across the globe, I can say that we are not even sure of the level of exchange rate that when the economy starts easing up more and we start doing importation in the full scale. We are going to have an upward surge in our exchange rate, so I was expecting that it will be maintained just as has been done.”
“Also looking at the quarter that we find ourselves which is the last quarter, under no circumstance did I anticipate the committee to reduce the policy rate because of inflation pressures here and there and when we get into Christmas we have issues of price surges and also with the upcoming elections a lot of people will want to keep their money in foreign currencies like the dollar”.
Earlier Monetary Policy Rates
In January 2020, the Monetary Policy Committee of the Bank of Ghana voted to maintain the policy rate at 16 percent. This was the sixth time the rate had been maintained at 16 percent.
In March this year, the Monetary Policy Committee (MPC) of the Bank of Ghana, reduced the policy rate to 14.5%.
The rate was maintained in May and July 2020, following the impact of COVID-19 on the economy.
The decision according to the Governor of the Central bank, Dr. Ernest Addison, was based on uncertainties in the economy caused largely by the COVID-19 pandemic.
