The Association of Ghana Industries (AGI) is challenging the Bank of Ghana (BoG) to compel banks to reduce their lending rates following the Policy Rate cut. 

The Monetary Policy Committee (MPC) has reduced the key benchmark rate at which the central bank lends to commercial banks from 23.5 percent to 22.5 - representing a drop of 100 basis points or 1 percentage point.

The AGI has welcomed it and is demanding banks also immediately reduce their lending rates - especially after a similar cut in the Policy Rate earlier this year.

The President of AGI, James Asare Agyei is sceptical banks will on their own reduce their rates to the relief of businesses.

"The BoG should think about capping interest rates so that with Policy Rates coming down by 300 basis points, it is expected that at least the stretch between the Policy Rate and Base Rate of banks should not exceed 400 basis points.

"By so doing, it will regulate how much banks can charge on the credit they give," he said.    

Analysts have, however, kicked against this arguing only market forces should be allowed to determine such rates in a free market economy like Ghana’s. 

But Mr. Asare Agyei believes otherwise saying "we are not calling for control, we are calling for regulation and monitoring of the activities of the commercial banks."

He argues that such monitoring and regulation is needed so that "businesses can leverage on the good things happening in the economy at the moment."