The Monetary Policy Committee of the Bank of Ghana will for the second time this year review the economy, particularly the monetary economy, and make projections for the future.
The 99th meeting is expected to begin on Wednesday 17th March 2021 and end on Friday 19th March 2021.
It is coming at a time when the 2021 Budget estimates will be presented to Parliament today, March 12, 2021.
However, this time around, all eyes will be on an expected policy rate cut. The policy rate-the rate at which commercial banks borrow from the Central Bank was kept unchanged at 14.5% in January this year.
The MPC cited risks to growth and inflation as the major reasons why the base lending rate was maintained.
But some research institutions are forecasting a possible policy rate cut this time around to ease the cost of borrowing.
Fitch Solutions expects an easing in the policy rate at the end of the first quarter of the year. The investment firm, Doobia also said “the higher-than-expected deceleration in inflation to within the central bank’s target range is likely to provide strong support for a policy rate cut in the next MPC meeting in March, subject to the outcome of February inflation, which faces immediate risks from higher crude oil prices.”
Average lending rates of commercial banks have fallen by 0.11% between August 2020 and October 2020. However, between January 2020 and October 2020, it has gone down by 1.8%.
Though marginal, it comes as a good omen because the cost of borrowing in the country keeps easing.
Interest rates slowdown
Interest rates on the money market broadly showed down across the yield curve in 2020.
The 91-day declined to 14.1% in December 2020 from 14.7 percent last year, and the 182-day Treasury bill rate fell to 14.1% from 15.2% over the same comparative period.
On the secondary bond market, yields on 6-year, 7-year, 10-year, and 15-year bonds all declined. The rates on the 20-year bond, however, inched up marginally to 22.3 percent in December 2020 relative to 22.1 percent in December 2019.
Source: mypublisher24.com