Economist and Lecturer at the University of Ghana Business School (UGBS), Prof. Agyapomaa Gyeke-Dako, has urged banks to reduce their lending rates, arguing that improving macroeconomic conditions provide room for cheaper credit.
Speaking on Channel One TV’s Quarterly Economic Outlook on Thursday, July 9, she said the decline in inflation and falling interest rates in the money market should encourage financial institutions to lower the cost of borrowing.
According to her, lending rates are closely linked to developments in the broader economy, particularly inflation trends.
She explained that when inflation remains high or is projected to increase, interest rates usually remain elevated. However, with inflation now declining, she believes banks have an opportunity to review their lending rates and make credit more affordable for businesses and individuals.
“I think that interest rates coming down is also a function of what is happening in the macroeconomy as well. So if inflation is high or if you expect inflation to go up, you don’t expect that interest rates would be low.
“Thankfully, inflation is coming down and therefore I think that’s why we are all putting pressure on the banks now to be able to reduce their lending rates,” she said.
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