Interest rate is one of the key macroeconomic (intermediate) variables when it comes to the conduct of monetary policy.

Questions

i. Explain the concept of interest rate and show how the Bank of Ghana determines the prime rate in the country.

ii. Also carefully distinguish between the prime rate, inter-bank rate, and the bank’s base rate.

iii. Using data from 1996 to 2020, calculate the interest rate spread. Do you think this will have any impact on domestic savings mobilization and lending?

iv. Briefly discuss the roles played by the Monetary Policy Committee of Bank of Ghana in the conduct of the monetary policy in Ghana.