Ghana’s central bank has slashed its benchmark policy rate by 150 basis points (150 bps) to 14.5 percent, from the previous 16 percent, as it announced a raft of measures to contain the economic impact of the COVID-19 pandemic.
In its Monetary Policy Committee press release, the Bank of Ghana said the country was taking a cue from major global economies, which had also reduced its policy rates in the face of the COVID-19 pandemic.
The reduction in the benchmark rate is expected to act as a fiscal stimulus package for businesses in these difficult times, and help to minimize the impact of the pandemic on the global economy.
“Besides, the primary reserve requirement for banks has been reduced from 10 percent to eight percent to provide more liquidity to banks to support critical sectors of the economy,” the statement said.
The central bank has also reduced the capital conservation buffer for banks from three percent to 1.5 percent. This reduces the capital adequacy requirement for banks from 13 percent to 11.5 percent.
The bank has extended the period for loans and encouraged more cashless transactions in a bid to forestall the spread of the pandemic virus through financial transaction activities.
The central bank had maintained the policy rate at 16 percent since January 2019.