Accra, July 18, GNA - The Bank of Ghana (BoG) Monetary Policy Committee (MPC) on Friday reduced the Prime Rate from 27.5 per cent to 26 per cent. This is in consonance with the general policy stance and improvement in the overall economic prospects and balance of risks to price stabilization, Dr Paul Acquah, Governor of the Bank of Ghana and Chairman of the MPC, said. The change comes in the face of recent calls from within government and the financial sector on commercial banks to reduce their interest rates.
Dr Acquah told a press conference in Accra that the trends in macroeconomic developments and information available on the various sectors of the economy pointed to steady downward pressures on prices with the benefit of increasing stability in the exchange market. He said inflation stayed within a tight range of 29 to 30 per cent but eased marginally downward. Dr Acquah said, notwithstanding, the marginal declines in inflation, the monthly inflation trends over the last three months showed that underlying price pressures were easing with disinflations beginning to take hold. "The numbers show that the monthly increases in prices over the last three months were broad with the lowest recorded over the same period in the last four years," he said, adding that this had been driven by both food and non-food components.
Dr Acquah said outlook for the second half of this year would continue to be driven by prudent fiscal and monetary policies, "which hold the key to low inflation and interest rates". He said the outlook for the external sector was favourable, given the current pace of increased exports from private sector remittances, adding that barring any serious risks of reversals in the second half of the year, inter-bank purchases of foreign exchange would also rise. Dr Acquah said significant export earnings were also expected from a bumper cocoa harvest this year. "Although a significant weakening of commodity markets due to slow global recovery would be a source of risk to the terms of trade, crude oil prices on the other hand have returned to within normal range." Preliminary data for June on the execution of the 2003 budget indicate that the fiscal position has been evolving in line with the budget framework approved in March.