Universal banks operating in the country are expected to slash down their respective lending rates in the next couple of months.
According to the Economist Intelligence Unit (EIU) report, although the banking sector is relatively healthy, lending rates will come down only slowly, largely as a result of structural constraints in the sector.
The Monetary Policy Committee during its recent press conference increased the Monetary Policy Rate by 100 basis points to 13.5 per cent. This was to contain future inflation pressures and realign interest rates in favour of the domestic assets, and also to ensure that inflation expectations remain anchored to keep inflation within the target band.
With the recent increase in the policy rate by Bank of Ghana, universal banks are expected to review their respective base lending rates upwards in response to the new policy rate.
But Morgan Stanley Research reacted to the Central Bank�s decision to increase the policy rate by 100 basis points to 13.5 percent, saying it was premature.
�Although we were not expecting policy action as early as this meeting, we discussed the possibility of earlier tightening in our recent feedback note adding that Policy normalization expected-but not so early: Ghana�s January CPI data published by the Ghana Statistical Services last week showed that headline inflation had accelerated from 8.6% year in December to 8.7% year� the statement said.
Interest rates generally trended down in 2011. On the money market, the 91-day Treasury bill rate fell from 12.3 per cent to 10.3 per cent while the 182-day rate also fell from 12.7 per cent to 11.1 percent. However, in January 2012, the 91-day Treasury bill rate increased to 10.9 per cent while the 182-day rate increased marginally to 11.2 per cent.
Similarly, the interest rate on the 1-year note declined from 12.7 per cent to 11.3 per cent and the 2-year note fell from 12.7 per cent to 12.4 per cent. The 1-year note has since moved up to 11.4 percent while the 2-year note has dropped to 12.3 per cent.
Average base rates of banks went down from 25.8 per cent to 22.5 per cent in 2011 with quotations within the range of 16.8-25.9 per cent. Average lending rates also declined from 27.6 per cent to 25.9 per cent in 2011, with Annual Percentage Rates for enterprises ranging between 17.4-30.8 per cent.
<<Print>>