![NBOSI-01[1]](https://cloudypos.com/nbosi/wp-content/uploads/sites/59/elementor/thumbs/NBOSI-011-rc3u2ljhmnhjs84d8kcrtfc3b1mya82rhqxld85wl8.png "NBOSI-01[1]")
THE MARKET HAS MOVED FOR BOG TO CUT RATE
1. More Cash Available: Banks currently have plenty of Ghana Cedi (GHS) cash to lend. This is because the Bank of Ghana (BoG) has temporarily stopped borrowing money from banks overnight. 2. Big Drop in Short-Term Rates: The BoG also reduced how much cash it borrows from banks (“Open Market Operations” or OMO). With so much cash floating around, banks started competing fiercely to lend it out, slashing interest rates in the process. OMO rates plunged dramatically: from 28% just two weeks ago to 10.5% yesterday. 3. Interest Rates Falling Overall: Thanks to lower inflation (down from 18.8% in May to 13.7% in June) and the big drop in OMO rates (plus all that extra GHS cash), interest rates across the board are falling fast. Rates for government short-term bills (T-bills) and longer-term bonds are now back down to levels we haven’t seen since before COVID (around 13.7% and 16.5% respectively). 4. Cheaper Loans Coming Soon? (Ghana Reference Rate – GRR): The GRR – the key rate banks use to set their own loan prices – is expected to fall soon. This is because: a) The BoG’s key policy rate (set next week) is widely expected to be cut. b) The goal is to make borrowing cheaper to encourage people and businesses to take loans. c) Current average loan rates are around 23%, but the BoG expects them to potentially drop towards 10% in the coming weeks or months, especially given the huge fall in OMO rates. 5. US Dollar (USD) Demand High: While the exchange rate between the US Dollar and Ghana Cedi has been fairly steady, demand for USD has shot up without a matching increase in supply. This is causing some delays for clients needing foreign currency.
BoG MEETING NEXT WEEK (Big Deal!):
The Bank of Ghana’s Monetary Policy Committee (MPC) meets next week. Given all these recent changes (falling inflation, falling rates, extra cash), everyone expects them to cut their main policy rate. There’s a lot more Ghana Cedi cash around, pushing interest rates down sharply. This should soon lead to significantly cheaper loans. Watch for the BoG’s official rate decision next week, which is likely to confirm this downward trend.
