A senior lecturer at the University of Professional Studies, Accra (UPSA), Dr. Eric Boachie-Yiadom, says Ghana’s interest rates are unlikely to decline sharply in the near term, despite signs of easing inflationary pressures.
Speaking to Joy Business, Dr. Yiadom expressed cautious optimism about the outlook for interest rates, noting that any significant reduction will depend largely on confidence in the broader economic environment and the effectiveness of monetary policy.
According to him, while inflation appears to be moderating, commercial banks remain hesitant to cut lending rates aggressively due to concerns about market stability.
“How long it will take depends on the confidence they have in the policy rate,” he said. “Any policy rate that is offered must reflect the general dynamics of the economy.”
Dr. Yiadom warned that rapid interest rate cuts could trigger increased demand for loans, potentially pushing rates back up and exposing borrowers especially those on floating-rate loans to higher risks.
“If rates go down and people rush for loans, rates could rise again, and that will affect borrowers, particularly those on floating rates,” he explained.
He added that although the central bank may encourage commercial banks to reduce lending rates, such decisions ultimately remain business-driven, noting that “Banks will not want to reduce rates to a point where it affects their operations.”
Dr. Yiadom said commercial banks are likely to maintain a “wait-and-see” approach until there is sustained confidence in the economy, adding that meaningful rate reductions will only occur when businesses and lenders are assured of long-term macroeconomic stability.
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