16 percent policy rate must reflect in cheaper credit – Chamber of Commerce

The Ghana National Chamber of Commerce and Industry, is asking the Bank of Ghana to ensure that the decision to maintain the policy rate at 16 percent translates into lower interest on credit for businesses.

The policy rate determines the rate at which the Central bank lends to commercial banks, and subsequently how much people pay on their loans.

But some businesses say even at 16 percent throughout 2019, the rate has made little impact as interest rates are still high.

Chief Executive Officer of the Ghana National Chamber of Commerce and Industry, Mark Badu Aboagye is thus calling for a real translation of the policy rate on loans for businesses and individuals.ADVERTISEMENT

“Our concern is not either increasing or reducing or maintaining the policy rate. It is how it translates it into the cost of credit. We have had policy rate coming down, but its effect on the interest rate, the cost of credit has not been very effective, so we are looking at how going forward these reductions or maintaining the policy at this current rate will translate into a lower credit rate for the business community”.

Throughout 2019, the MPC maintained its policy rate at sixteen percent, citing some risks to the inflation target of 8 percent plus or minus 2.

On January 21st 2020, the Monetary Policy Committee of the Bank of Ghana voted to maintain the policy rate unchanged at 16 percent for the sixth consecutive time.