Question: QUESTION 1 After staying virtually flat for about a year and a half, the average lending rate of banks has started to show signs of

QUESTION 1 After staying virtually flat for about a year and a half, the average lending rate of banks has started to show signs of decline in April after the Bank of Ghana reduced the monetary policy rate the month before. The Summary of Economic and Financial Data (May 2020) published by the Bank of Ghana has shown that average lending rate has finally moved out of its comfort zone to a step downward. Prior to recording 22.38 percent in April, the average lending rate has since the past 17 months (December 2018) not come below 23%. How would banks benefit when interest rates decrease? 10 marks

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