| Ghana: Monetary Policy Rate vrs Inflation |
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(Nov 2002 - May 2013) - Trend |
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Chart of the "Monetary Policy Rate vrs Inflation" in Ghana Since November 2002.
(Source: Bank of Ghana)
The Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) at its recent meeting in May 2013, raised its policy rate to 16%, despite admitting a squeeze in credit to the private sector.The new rate, which is a 100 basis points higher than the initial 15 per cent, is expected to feed into the cost of funds from commercial banks and other financial institutions to businesses and other loan seekers nationwide.
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What is Monetary Policy Rate?
The policy rate is the rate at which commercial banks borrow from the Bank of Ghana.
It thus serves as a key determinant of the rate at which commercial banks and other financial institutions lend to their customers, in that once it goes up, the cost of Bank of Ghana funds rises and that mostly causes financial institutions to pass on the extra cost to their consumers by way of higher interest rates.
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