The Private Enterprise Federation has lauded the move by the Bank of Ghana to reduce the MPC rate by 100 basis points although they admit that a further reduction would have had a greater impact on their businesses.
The new figure (22.5%), was announced by the Governor, Dr. Ernest Addison after supervising his maiden Monetary Policy Committee(MPC) meeting on Monday, May 22, 2017.
It also followed his appointment to the central bank in March. Before this, the former Governor, Dr. Abdul Nashiru Issahaku announced a 200 basis point reduction from of 25.5 percent to 23.5 percent in March.
This is the second time in this year that the central bank has reduced the policy rate.
Members of PEF argue that the reduction does not directly reflect in the interest rates offered by banks and are therefore expectant of government to work towards creating more favorable economic conditions so as to compel banks to reduce interest charges.
Speaking to Citi Business News, Chief Executive Officer of PEF, Nana Osei Bonsu said government should continue to create an enabling environment for businesses.
“Well you see the policy rate has an impact but how much is it that’s a key question that nobody seems to understand or appreciate if there is a direct relationship between the policy rate and the rate of interest charged by banks.
So until MPC rate has a greater weight on the formula then we are going to have a problem but at least it’s in the right direction,” Nana Osei Bonsu stated.
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