Alex Mould Questions Ghana’s High Interest Rates Despite Economic Improvements

In addition, a recent Treasury bill auction recorded an 85% oversubscription, a clear signal that banks are flush with cash.

“Banks are sitting on excess cash, and some are even turning away fixed-term deposits because it’s costly money,” Mould noted. “Yet we’re not seeing a corresponding drop in lending rates to businesses or consumers.”

Mould attributed part of the problem to the way the Ghana Reference Rate (GRR) — the benchmark used for setting lending rates — is calculated.

The GRR formula assigns 40% weight to the MPR, 40% to the 91-day Treasury bill rate, and 20% to the interbank rate. This heavy reliance on the MPR, Mould suggested, keeps lending rates high even when market rates are falling.

Economists and business leaders have long called for reforms in Ghana’s interest rate-setting mechanisms, warning that prohibitively high borrowing costs stifle private sector growth and undermine investment.