The Bank of Ghana has kept the policy rate – the rate at which it lends to commercial banks – at 16%.

This confirms the predictions of some analysts and economists that the policy rate would be held at 16% for, at least, the next quarter of 2020.

They cited fiscal risks and expected strengthening of the dollar to the cedi as the major reasons though the economic fundamentals are looking good.

The maintenance of the policy rate means that yield on fixed income instruments and lending rates would remian relatively same during the next two months or so.

The Bank of Ghana cited a positive economic outlook but with inflationary pressures lingering it decide to maintain the policy rate for the sixth consecutive time since it last reduced about a year ago.

"Overall, the economy presents fairly resilient and robust performance with regards to output growth and a strong trade and payments position. The economy is positioned firmly on the path of stability with inflation forecasted to stay within the medium-term target band of 8±2 percent, barring any unanticipated shocks", the Governor of the Bank of Ghana Dr. Ernest Addison said.

Under these circumstances, he emphasised the Committee viewed risks to the inflation and growth outlook as broadly balanced, and therefore decided to keep the Monetary Policy Rate unchanged at 16.0%, while standing ready to take decisive policy actions when necessary to ensure that inflation remains within the target band.

Meawhile, interest rates on the money market increased slightly across the various maturities of the yield curve.

The 91-day Treasury bill rate inched up to 14.7% in December 2019 compared with 14.6% a year ago. Interest rates on the 182-day instrument also moved up to 15.2%, from 15.0% over the same period a year ago.

In contrast, rates on the secondary bond market broadly declined. Yields on the 7 and 15-year bonds marginally declined to 21% and 19.9% in December 2019, from respective 21% and 21.4% in December 2018.

The yield on the 10-year bond, however edged up slightly to 21.3% from 21.2% over the same review period.

The weighted average interbank lending rate however declined to 15.2 percent in December 2019, from 16.1 percent in the same period a year earlier. In a similar trend, average lending rates compiled from the banking sector marginally declined to 23.6 percent in December 2019, from 23.9 percent in December 2018.