 has maintained its Monetary Policy Rate (MPR) at 25% despite improvements in inflation, liquidity, and borrowing costs.){kind=link}
Former Executive Director of Standard Chartered Bank, Alex Mould, has criticised Ghana’s persistently high interest rates, questioning why the Bank of Ghana (BoG) has maintained its Monetary Policy Rate (MPR) at 25% despite improvements in inflation, liquidity, and borrowing costs.
In a detailed analysis of the country’s monetary policy stance, Mould argued that the central bank’s policy appears misaligned with prevailing market conditions, which point to abundant liquidity and falling short-term interest rates.
Recent figures show the 91-day Treasury bill rate has dropped to 10.29%, with short-term government borrowing costs following a similar trend. The interbank rate—used by banks for overnight lending—has reportedly fallen below 15%, far beneath the MPR.
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.