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MONETARY POLICY COMMITTEE OF THE BANK OF GHANA REDUCES MONETARY POLICY RATE BY 100 BASIS POINTS TO 17.0 PER CENT

The Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) has decided to reduce the monetary policy rate by 100 basis points to 17.0 per cent, Dr Ernest Kwamina Yedu Addison, Governor, BoG, has announced.

 

The decision to reduce the policy rate was made known at a news conference in Accra, yesterday, after the 82nd regular meeting of the MPC in Accra.

 

In arriving at the decision, the Committee undertook a review of the macroeconomic situation against the background of developments in the global economy, assessed the pace of economic growth, implementation of the 2018 budget and the outlook for inflation.

 

Monetary policy is the government’s or Central Bank’s process of managing money supply to achieve specific goals—such as constraining inflation, maintaining an exchange rate, achieving full employment or economic growth.

 

Monetary Policy is basically the government's way of controlling the economy by using interest rates and the money supply, while Interest rates are the costs of borrowing money from a bank or the amount of money the bank will give you for keeping your money there.

 

The government sets the base interest rate with its Central bank and the private banks set theirs at around this rate Credit is when one borrows money from someone, typically a bank, and so its price is determined by interest rates

 

The money supply is the total amount of a currency (the sum of all the £ / $ in circulation). The aims of monetary policy are mainly to target inflation (the sustained rise in prices in an economy) and maintain low unemployment [although it is impossible to achieve both at the same time.

 

Inflation can be controlled by changing interest rates and the money supply basically.

 

Source: ISD (G.D. Zaney, Esq.)

 

 

Created: 22 May 2018
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