Ghana: BoG's Rate Cut Set to Boost Lending - Moody's

Aug 01, 2017 | Business Day Ghana; All Africa

Ghana's central bank's 1.5 per cent rate cut this week will boost lending by local banks and is a signal that the economy is gradually improving, Moody's Investors Service said on Thursday.

The major commodity exporter's GDP growth is expected to recover to 6.1 per cent this year and 7.5 per cent in 2018 compared with 3.5 per cent last year, the ratings agency said in a research note. Central bank governor Ernest Addison announced the rate cut to 21 per cent from 22.5 per cent on Monday, citing a downward trend in consumer inflation and the potential for higher economic growth on increasing oil output. The cut was the fourth consecutive reduction since November and was generally expected by markets. It falls within the central bank's target of 8 per cent inflation plus or minus 2 percentage points by the end of 2018, Addison said. Moody's said the cut would ease lending rates and asset risks, which increased substantially last year and caused banks' non-performing loans to rise to 21.7 per cent by the first half of 2016. "The rate cut and falling inflation also will support Ghana's operating environment, boosting demand for new loans and benefiting banks' revenue," Moody's added. Read more on All Africa. Source: All Africa