Business, growth prospects high – BoG
The Bank of Ghana (BoG) says there are positive sentiments on growth prospects, realization of business expectations and general improvements in the Ghanaian economy.
According to its confidence surveys conducted in February, the general outlook of the Ghanaian economy remains positive.
“The pace of growth in key monetary aggregates has continued to moderate consistent with contained aggregate demand pressures. Annual growth in total liquidity slowed to 12.5 percent in January 2018 from 26.7 percent a year ago (also partly reflecting the reduction in the number of banks in the monetary survey from 34 to 32)”, it stated in its latest Monetary Policy Committee Report where it cut its base lending rate by 200 basis points to 18.0 percent.
The indication is that cost of credit will ease while access to credit will improve as banks boost lending.
The Central Bank also said there was a gradual downward migration of all money market interest rates, as well as re-alignment of the yield curve in line with the monetary policy stance since March 2017.
The interbank BOG- rate, the rate at which commercial banks lend to each other, declined further to 18.3 percent in February 2018 from 19.3 percent in December 2017 and 25.2 percent a year ago. Also, the interest rates on money market instruments declined, especially at the short-end of the market.
In February 2018, rates on the 91- day Treasury bill instrument dropped to 13.3 percent from 15.9 percent in February 2017. Similarly, the 182-day instrument declined sharply to 14.9 percent from 18.5 percent, while the 1- year note also fell to 15.0 percent from 19.0 percent over the same period.
The Central Bank also said that the ongoing regulatory reforms in the banking sector are to promote stability of the financial system and to properly position it to support the economic growth agenda.
According to the regulator, the banking sector as a whole continues to be liquid, profitable and solvent with some modest gains in asset quality. However, there remain few vulnerabilities and the Bank of Ghana expects banks to continue to implement their recapitalization plans in line with the new minimum capital requirement.
Business Finder reported earlier that Ghana and three other major sub-Saharan African countries-Nigeria, Kenya and South Africa are expected to lower further their policy rates-the rate at which Central Bank lend to commercial bank, some analysts and research think tanks have predicted.