| The Bank of Ghana has reduced the prime rate to 18%. The governor of the central bank, Mr. Kwesi Amissah-Arthur announced the new rate to the media at his very first Monetary Policy Committee (PMC) press conference Friday November 20, 2009. Addressing the media he said the MPC undertook a review of the macro economic situation against the background of developments in the global economy, assessment of the pace of domestic economic growth, the execution of the 2009 budget and the outlook for inflation. He said there is evidence of modest recovery in the global economy which has been pushed up by the strong performance of Asian economies, particularly China, and recovery in the advanced economies. Mr. Amissah-Arthur noted that the MPC has concluded that some stabilization and consolidation, especially with respect to inflation and exchange rate expectations had begun to take hold during the second and third quarters of the year. He indicated that the trend is likely to continue through to December 2009. According to the governor, latest surveys conducted by the Bank of Ghana in October 2009 have confirmed earlier indications that both business and consumer sentiments continue to reflect signs of recovery. Ghana’s inflation in April 2009 was 20.56%, and at that rate, the bank predicted that inflation would drop to around 12.5% by the end of the year. The country’s inflation however has dropped to 18.04% in October, the fourth consecutive fall in the year sparking hopes of economic recovery and a possible reduction in the prime rate. It is however doubtful if the predicted 12.5% would be achieved at the end of the year. Based on these positive signs, the central decided to reduce the prime rate by 50 bases points to 18%.
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