The Monetary Policy Committee (MPC) maintained the policy rate at 20% on Monday, 22 January 2018.  Anytime policy rate adjustments get into the spotlight, the first item that comes to mind is lending rates for banks.  The general observation however is that though the policy rate has declined by 5.5% (550 basis points) from January 2017, the lending rates for banks has only gone down only by 1.9% (190 basis points) within the same period.  Various pressure groups have called for banks to reduce their lending rates more than they have done. The Ghana Bankers Association is developing guidelines for setting lending rates.  Lets see how that pans out. However other factors, other than the policy rate, determines what a bank would charge as its lending rate.  It could be seen from the chart that, banks continue to pay deposit rate of 10.4% which is a slight reduction of 1.46% from the January 2017 rate of 11.9%.  Also the Ghanaian Cedi continues to depreciate against the dollar currently at Ghs4.42 from Ghs4.27 in January 2017.  The forex rate which forms a strong basis for inflation, cost of operations among others would continue to influence banks’ lending rates.  Therefore ghanatalksbusiness.com does not expect any significant declines in the lending rates of banks at least in the shorter 1st quarter.

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