“And if interest rates go down and fall below the market range, it will undermine the policy rate’s credibility as a monetary policy instrument. So, the high fiscal risk and associated high borrowing requirement make it difficult for an immediate cut in the policy rate,” he said in an interview with the B&FT. “So, you will need a policy rate regime that makes holding cedi securities attractive because the return on them is attractive. If you reduce the policy rate, what you are saying is the return on cedi securities should also reduce; and that will make holding cedi securities unattractive, which will stoke currency pressure. So it is within these contexts that we think the policy rate will be maintained,” he said.

Source: GhanaWeb February 02, 2020 06:11 UTC