Banks will continue to invest heavily in Treasury bills irrespective of the decision that was taken at the Monetary Policy Committee meeting yesterday.
This suggests that government will continue to crowd out the private sector from assessing credit or loans.
Most economists, analysts and market watchers believe interest rates will remain relatively stable at least for the next two months though the value of the Cedi has started improving, while the fiscal situation of the economy has also witnessed some progress. They believe until inflation starts trickling down rapidly for at least three months continuously, interest rates will remain virtually unchanged.
Commercial banks invested 73.3 per cent of their investments alone for the first three months of this year in the short-dated instruments and the figure could even go up since most of them have stopped lending particularly to new clients.
With the yield on the 91-day bill rising marginally to 25.1827 per cent at an auction on Friday, July 10, from 25.1801 per cent at the last sale, the financial intermediaries are likely to continue the trend of their investments.
The MPC of the Bank of Ghana announced its policy rate for at least the next two and half months yesterday after concluding its 65th regular meeting.
Business School Lecture and Economist at the University of Cape Coast, John Gatsi told Business Finder that he expected the policy rate to be maintained to accommodate recent developments in the Ghanaian economy.
“If you look at the positive development from the IMF bailout programme on the economy and the recent improvement in the value of the Cedi against the dollar I expect the policy rate to be maintained or at worst reduced marginally.”
“We are now seeing signs of improvement in the performance of the economy but we cannot rush and bring interest rates significantly down’, he added.
Interest rates have broadly declined during the period. Between December 2014 and April 2015 both the 91-day and 182-day Treasury bill rates fell from 25.8 percent and 26.4 percent to 25.1 percent and 25.8 per cent respectively.
The 1-year note rate remained unchanged at 22.5 per cent. The 3-year bond rate fell from 25.4 to 22.5 per cent, whiles the 5-year bond rate rose to 21 per cent from 19.0 per cent.
The weighted average interbank rate declined marginally to 23.3 per cent in April 2014, from 23.7 per cent in December 2014.
Average lending rates of the banks have remained stable at 29.0 per cent in March 2015 whiles the average rate on the 3-month deposits declined to 13.0 percent in March from 13.9 per cent in December 2014.
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