Governor of the Bank of Ghana, Dr. Johnson Asiama, has called on commercial banks to exercise caution in adjusting their lending rates after the recent increase in the policy rate.
During the 123rd Monetary Policy Committee (MPC) meeting, Dr. Asiama stressed the need for transparency in communication with clients and emphasized the importance of continuing to support viable businesses, particularly those in vulnerable sectors.
Acknowledging the impact of the policy rate hike on borrowing costs for businesses and households, Dr. Asiama expressed confidence in the financial system’s resilience.
“Colleagues, we also recognize that the policy rate hike will affect borrowing costs for 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. We therefore want to urge banks to exercise prudence in adjusting lending rates and maintain transparent communication to your clients.”
He pointed out improvements in financial stability, bank profitability, and liquidity, which position the sector to absorb these effects.
“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,” he said.
He urged banks to provide tailored solutions to mitigate the impact on vulnerable sectors and ensure continued support for viable businesses.
Dr. Asiama also shared positive developments in the banking sector, noting a 34.05% year-on-year asset growth by the end of February 2025, primarily funded by a 27.9% increase in deposits, highlighting sustained improvements in financial stability, despite persistent challenges.
“Overall, colleagues, we continue to witness broad-based improvement in financial stability although we remain keenly aware. Persistent challenges require our continued and focused efforts. The recent gains in microorganic stability following the domestic debt action program, the improved profitability of banks, and the structural high liquidity and continuing recapitalization are improving the soundness in the banking sector.”
The Governor further emphasized that the banking sector continues to strengthen, driven by improved solvency, asset quality, liquidity, and profitability.
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