Adnan Adams Mohammed
Commercial banks operating in the country are being cautioned by the Bank of Ghana to be transparent and reasonable in adjusting their lending rates upwards in line with the monetary policy rate upward adjustment by 100 basis points a fortnight ago.
At the most recent Monetary Policy Committee meeting held in the last week of March, the policy rate was increased to 28 percent from the previous 27% with three Committee members voting in favour of the hike while two members voted in favour of retaining the previous rate.
The MPR hike provides guidance for commercial banks and other lenders to adjust their rates if they wish to do so. However, the central bank wants lenders to be mindful of the impact of their rate increase on both businesses and households.
“While the policy tightening will affect funding costs and credit pricing in the near term, the financial system is well-positioned to absorb these effects”, Governor of the Bank of Ghana, Dr. Johnson Asiama, speaking at the maiden post-MPC meeting with CEOs of commercial banks in Accra last week, noted.
“We therefore urge banks to exercise prudence in adjusting lending rates and maintain transparent communication with clients.”
Recognizing the significant impact the adjust in lending rate could have on businesses and households, the central bank has urged the commercial banks to support struggling sectors with targeted financial support.
“The policy rate increase also strengthens external buffers, supports the cedi, and signals our commitment to macroeconomic stability at a time of heightened global uncertainty. However, we also recognize that the policy rate hike will affect borrowing costs for businesses and households. Viable businesses should continue to receive support, and tailored solutions should be explored to mitigate the impact on the most vulnerable sectors,” the Governor added.
The hike in the policy rate by 100 basis points is the first adjustment since September 2024.
Meanwhile, Dr. Asiama has explained that the decision was “aimed at reinforcing the disinflation process, which, while underway, remains too gradual to secure lasting stability. The decline in headline inflation from 23.8 percent in December to 22.4 percent in March confirms that recent policy actions are having the intended effect. However, inflation expectations remain elevated, and core inflation is still above the medium-term target.”
Despite recent challenges, the Governor also expressed cautious optimism about the state of the banking sector. He noted that, even in the absence of relief measures, the sector has shown sustained improvement, driven by gains in solvency, asset quality, liquidity, and profitability.
Consequently, Dr. Asiama highlighted ongoing concerns regarding solvency issues in a few domestically controlled and state-owned banks, where recapitalization efforts remain unclear.
“Addressing these capital shortfalls remains a top priority,” he stated. “We are working closely with the affected institutions to achieve sustainable capital levels, restore depositor confidence, and ensure full compliance with regulatory requirements.”
Dr. Johnson Asiama, also announced plans to enhance the central bank’s supervisory and crisis resolution tools.
Central to this initiative is the upcoming launch of a Resolvability Assessment Framework, designed to ensure that banks remain well-capitalized and are adequately prepared for distress scenarios—particularly in an increasingly interconnected financial landscape.
This framework, he noted, draws on lessons from past bank resolutions and forms part of a broader strategy to bolster crisis preparedness.
“To build true resilience, we must move decisively beyond traditional, reactive supervision toward a more forward-looking, risk-sensitive, and system-aware model,” the Governor stated.
Dr. Asiama also reaffirmed the Bank’s commitment to supporting the sector through effective policy, open dialogue, and collaboration, aiming to build a more inclusive and stable financial ecosystem that meets the needs of all Ghanaians.
