Average lending rates shot up sharply to 35.58% in December 2022, from 33.87% recorded in November 2022, data from the Bank of Ghana has revealed.

This is equivalent to 2.82% interest rate on loans per month.

According to the January 2023 Summary of Economic and Financial Data, average lending rates have been increasing sharply since a year ago.

In actual fact, it has gone up by 15.42% since January 2022.

It stood at 20.16% in January 2022, but shot up sharply to 24.27% in June 2022 and then to 26.46% in July 2022. It again went up to 27.96% in August 2022 and later to 29.81% in September 2022. It continued its rising trend reaching 33.87% in November 2022 and 35.58% in December 2022 respectively.

The higher lending rates have been caused by a record inflation rate [54.1% in December 2022] and significant exchange rate depreciation [about 37% year-to-date in December 2022].

This has consequently increased the cost of doing business in the country.

The average lending rate, however, varies among the banks and the respective sectors they lend to.

Some banks will offer loans equivalent to the Ghana Reference Rate of 32.83%, whilst others will charge rates as high as 43%.

Overall, it will also depend on the risk profile of the customers.

Again, some perceive lending to the agriculture and construction sectors as riskier, and therefore credit to these sectors are expensive.

Meanwhile, the Monetary Policy Committee of the Bank of Ghana will today January 30, 2023 decide on the policy rate – the rate at which banks borrow from the Bank of Ghana.

Ahead of the meeting, there are mixed predictions over whether the rate presently at 27% will be increase or not.