BoG To Maintain Prime Rate

Dr Kofi Wampah

Bank of Ghana (BoG) is expected to maintain the Prime Rate, the rate at which it lends to commercial banks today.

Analysts have predicted that the Central Bank would not change the policy rate, as inflation, one of the major determinants of interest rate, has been stable for some time now.

The announcement would climax the Monetary Policy Committee (MPC) meeting, which commenced on May 20, to review economic developments in the economy.

'We further expect the Central Bank to maintain current interest rates at best while it observes significant indicators to determine policy decisions in the short and medium term,' market analysts, Frontline Capital Advisors stated in its weekly report on the economy recently.

Interest rates on treasury securities funds, especially the 91-Day Treasury bill, hovers around 12 percent, but average lending rates of banks is about 28 percent though banks have begun reducing their base lending rates.

The cedi has fairly been stable against the major foreign currencies after assuming a fast depreciation rate at the beginning of the year basically due to unrelenting demand for the dollar, increased imports and lack of foreign capital inflows.

Despite its mixed performance, some players in the financial sector and analysts have predicted that the local currency will end the year at GH¢1.55 against the US Dollar.

The MPC will therefore find ways of preserving the local currency in order not to affect the profit margins of firms and prices of goods and services.

Some economic indicators such as the country's fiscal and trade deficits, foreign reserves, among other important indicators, are expected to be reviewed by the committee.

The MPC will make the necessary projections for the next quarter of this year. In addition, it will also assess the business risk factors.

The suggestions are expected to help the country to ensure a stable and vibrant economic environment.

 By Emelia Ennin Abbey