ABN - Ghana’s central bank has slashed its benchmark interest rate by 2% to 23.5%, citing recent downward inflation trends.
The rate cut is the national bank’s largest since December 2006, and represents a tangible move to encourage lending and business activity.
The West African nation is recovering from a growth slump in 2014 which was centred on lower commodity prices, increasing public debt and high inflation levels.
However, as inflation subsides the Bank of Ghana is looking to lower the cost of borrowing.
Bank of Ghana Governor Nashiru Issahaku said: “The [Monetary Policy] Committee noted that underlying inflation pressures have eased considerably and inflation is projected to trend downwards toward the medium-term target.
“There are indications that growth is likely to remain significantly below potential which, alongside an improved inflation outlook, provides some scope for monetary policy easing.”
The bank has a medium-term inflation target of 8%, plus or minus percentage points.
President Nana Akufo-Addo’s government took power in January 2017, aiming to stabilise national finances in order to restore previous levels of economic growth.