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The Bank of Ghana has announced a cut in key interest rate to the lowest level in four years as inflation drops closer to target.

While speaking to reporters in the capital, Accra, on Monday, the Central Bank Governor, Ernest Addison said that benchmark interest rates have been reduced by 200 basis point to 18%. Inflation pressures are subdued and price growth is moving closer to the six per cent to 10 per cent medium target, he said.

As the fastest growing economy in Africa, lower borrowing cost may boost further expansion. While inflation which stood at 10.6 per cent in February still exceeded the target band, the rate has dropped by almost half in the last two years and a stable local currency could help bolster growth even further.

“There could be another 200 basis points in the cutting sequence,” said Celeste Fauconnier, an analyst at Johannesburg-based Rand Merchant Bank Unit. “They need to stimulate the private sector and credit extension hasn’t really responded to the easing yet,” according to Bloomberg reporting.

The Bank of Ghana has lowered benchmark interest rate by 800 basis points since 2016. While credits extended to the private sector has grown slowly from the record low it reached in August, last year, January’s 11.7 percent rate is less than a quarter of what it was in 2014.