Professor Eric Osei Assibey, Associate Professor of Economics at the University of Ghana, has commended the Central Bank for the bold initiative of reducing the policy rate by 150 basis points to 14.5 percent from 16 percent
He also lauded the Central Bank for reducing the primary reserve requirement of banks from 10 percent to eight percent.
Professor Eric Osei Assibey, in an interview, said “I think that is very much in the right direction to increase money in the system to help boost growth and reduce the extent that COVID-19 could impact economic growth,” he said.
He said the reduction in the policy rate also provided the Bank of Ghana the opportunity to close the gap between inflation and the Policy rate, which had remained high despite the low inflation environment.
“We are not going to see more sell-off of our bonds because the situation out there is worse so it is an opportunity to reduce the yield on government bonds to close the gap between inflation and the monetary policy rate,” he stated.” This could trickle down on lending rates for businesses to get affordable credit to cushion industries”.
Source: Mybrytfmonline/Kofi Atakora
