Prime rate now 18%

The central bank periodically reviews the prime rate

The Monetary Policy Committee of the Bank of Ghana has reduced the prime rate to 18 per cent from 18.5 per cent.

This is the first time the rate has been changed since February.

The prime rate is the interest commercial banks pay on loans they take from the central bank.

The prime rate is the most basic of all interest charges in the banking industry and also influences the interest paid on loans taken from commercial banks.

The drop in the rate should normally translate into a reduction in interest charges, however the days when base rates moved in tandem with the prime rate are long gone and the banking industry no longer waits on the Bank of Ghana.

They rather use the Treasury Bill rate which tends to offer better returns. As a result, even though the prime rate has not changed since February, base rates have gone up a few times within the period.