The President of the Ghana Union of Traders Association (GUTA), Dr. Joseph Obeng is accusing banks in the country of running a cartel arrangement that keeps interest rates high despite reductions in the monetary policy rate.

According to him, the lack of responsiveness of banks, when it comes to reacting to changes in the policy rate, leaves much to be desired.

The Monetary Policy Committee (MPC) of the Bank of Ghana, for the first time since March 2020, reduced the policy rate to 13.5% after it was kept unchanged at 14.5 percent for six consecutive times.

Prior to the rate being reduced to 14.5% it had been maintained at 16% for some time.
The reduction in the rate saw average lending rates also drop from 22.38 percent in April 2020 to 20.93 percent in April 2021.

Speaking to Citi Business News on the recent development, the President of GUTA, Dr. Joseph Obeng, welcomed the lowering of the policy rate but charged the government to introduce a system that will compel banks to reduce their interest rates in a manner that’s commensurate with the drop in the policy rate.

“As a matter of fact, if the policy rate can go down even further it will be great. The most important thing, however, is for the banks to be responsive. I would say that the gap between the policy rate and interest rates in still high. The current system is a rip-off. I’m beginning to be convinced there is some kind of cartel arrangement between the banks because this shouldn’t be happening in a competitive environment.”

“So we will call on the Bank of Ghana or the government to find a way to introduce a base cap or make some compelling arrangements that will make the banks come along,” he added.