The Agricultural Development Bank (ADB) is the latest to announce a cut in its base rate from 24.75 per cent to 21.95 per cent, effective August 2, 2010.
While the CAL Bank is reducing its rate from 27 to 24 per cent, the Trust Bank is reducing its rate to 25 per cent from 26.5 per cent, with the Standard Chartered Bank’s rate down to 24 per cent from 25.5, all to take effect from August 1, 2010.
Earlier, the Ghana Commercial Bank (GCB), the Standard Chartered Bank (SCB), the Trust Bank (TB) and the United Bank for Africa (UBA) had reduced their base rates, effective July, with the prospect of further reduction in the coming days.
According to officials of the GCB and the UBA, there were indications that their base rates could reduce further after the various units of their institutions had met this week on the issue.
A release issued by the Communications Department of the ADB in Accra yesterday said, “The ADB today announced a cut in its base rate by 280 basis points to take effect on Monday, August 2, 2010. This will reduce its base rate from 24.75 per cent to 21.95 per cent, effective August 2, 2010.”
Signals from the other banks are that their base rates may go down further, following the single-digit inflation announced by the Ghana Statistical Service (GSS) two weeks ago.
The GSS announced a 9.52 per cent inflation for the month of June 2010, the lowest inflation figure for over two decades.
Inflation dropped to 12.75 per cent in December 2007.
The latest release represents a drop of 1.16 per cent from the previous month’s 10.68 per cent and also follows a consistent pattern in which the figure has been dropping over the last 12 months.
The rate of inflation has been falling for 12 consecutive months and the largest decline in 2010 was recorded when it dropped by 1.66 percentage points, followed by the January drop, which was 1.19 percentage points.
In response to the drop in inflation, the Monetary Policy Committee of the Bank of Ghana (BoG) reduced its policy rate from 15 per cent to 13.5 per cent.
The reduction in the policy rate was the third cut since February and came on the back of the lowest inflation rate in three years.
The policy rate, the rate at which commercial banks can borrow from the BoG, therefore, brought the cumulative reduction in the monetary policy rate for the year so far to 450 basis points.
Source: Daily Graphic