By Kofi Ahovi
Some universal banks in the country are maintaining their respective base lending rates in response to the Monetary Policy Committee’s (MPC) of the central bank reaction to the policy rate.
United Bank for Africa (UBA) has maintained it rate at 23%, while Stanbic also maintained it rate at 23.95%. HFC base lending rate is still 26.9%. However as the time of going to press, Standard Chartered Bank (SCB) had reduced it rate from 24% to 22%.
Managements of some of the banks including Fidelity Bank, Ghana Commercial Bank (GCB), Merchant Bank and Unibank among others were meeting last week to review their rates.
The MPC, led by the governor of the Bank of Ghana (BOG), Kwesi Amissah-Arthur, maintained the policy rate at 13.5%. BoG explained that on the basis of risks, the committee decided to maintain the current rate in order to avoid hikes in inflation and weakness in the economy.
The policy rate has declined significantly from the beginning of this year. This year, it started at 18.5% and was slashed to its current level of 13.5% in August 2010. This is the first time in 2010 that the rate has been maintained by the central bank after four successive reductions.
The policy rate, which serves as a benchmark, is the rate at which the central bank does overnight lending to universal banks in the country. It serves as a basis for the banks in setting their respective base lending rates, as well as lend to their most favoured customers.
After staying largely static initially, commercial banks began revising their base and lending rates downwards, in June this year, in line with the general decline in interest rates and easing inflation expectations. However, the declines have only been marginal and have not kept pace with the recent reductions in the policy and money market rates.
According to the Bank of Ghana’s 41st MPC report, in the first eight months of this year, interest rates declined over the entire spectrum of the yield curves with observed further shifts towards long-dated instruments. The share of the short-dated government securities went down to 38.8% in August 2010 from 39.8% in June 2010.
Between June and August 2010, the 91-day Treasury bill rate declined from 12.9% to 12.7%. The 182-day Treasury bill rate also declined from 13.4% to 13.1%.
The rate on the 1-year note fell from 13.8% to 13.4%. That for the 2-year fixed rate note also dropped from 13.9% to 13.4%. The 3-year fixed rate which was 15.7% in June went down to 14.3% in August 2010.
Over the same period, the interbank overnight rate, which reflect the rate at which commercial banks borrow and lend from each other, fell further from 13.2% to 12.3%.
Deposit money banks average base and lending rates witnessed declines over the period. Between June and August, the average base rate quotations of the banks declined by 153 basis points to 27.1% while average lending rates declined by 213 basis points to 28.5% over the same period.
Some universal banks in the country are maintaining their respective base lending rates in response to the Monetary Policy Committee’s (MPC) of the central bank reaction to the policy rate.
United Bank for Africa (UBA) has maintained it rate at 23%, while Stanbic also maintained it rate at 23.95%. HFC base lending rate is still 26.9%. However as the time of going to press, Standard Chartered Bank (SCB) had reduced it rate from 24% to 22%.
Managements of some of the banks including Fidelity Bank, Ghana Commercial Bank (GCB), Merchant Bank and Unibank among others were meeting last week to review their rates.
The MPC, led by the governor of the Bank of Ghana (BOG), Kwesi Amissah-Arthur, maintained the policy rate at 13.5%. BoG explained that on the basis of risks, the committee decided to maintain the current rate in order to avoid hikes in inflation and weakness in the economy.
The policy rate has declined significantly from the beginning of this year. This year, it started at 18.5% and was slashed to its current level of 13.5% in August 2010. This is the first time in 2010 that the rate has been maintained by the central bank after four successive reductions.
The policy rate, which serves as a benchmark, is the rate at which the central bank does overnight lending to universal banks in the country. It serves as a basis for the banks in setting their respective base lending rates, as well as lend to their most favoured customers.
After staying largely static initially, commercial banks began revising their base and lending rates downwards, in June this year, in line with the general decline in interest rates and easing inflation expectations. However, the declines have only been marginal and have not kept pace with the recent reductions in the policy and money market rates.
According to the Bank of Ghana’s 41st MPC report, in the first eight months of this year, interest rates declined over the entire spectrum of the yield curves with observed further shifts towards long-dated instruments. The share of the short-dated government securities went down to 38.8% in August 2010 from 39.8% in June 2010.
Between June and August 2010, the 91-day Treasury bill rate declined from 12.9% to 12.7%. The 182-day Treasury bill rate also declined from 13.4% to 13.1%.
The rate on the 1-year note fell from 13.8% to 13.4%. That for the 2-year fixed rate note also dropped from 13.9% to 13.4%. The 3-year fixed rate which was 15.7% in June went down to 14.3% in August 2010.
Over the same period, the interbank overnight rate, which reflect the rate at which commercial banks borrow and lend from each other, fell further from 13.2% to 12.3%.
Deposit money banks average base and lending rates witnessed declines over the period. Between June and August, the average base rate quotations of the banks declined by 153 basis points to 27.1% while average lending rates declined by 213 basis points to 28.5% over the same period.
Comments