Ghana’s central bank on Monday cut its benchmark interest rate by 250 basis points to 15.5 percent maintaining an easing policy stance as inflation continues to moderate and macroeconomic conditions show signs of improvement.
The Monetary Policy Committee (MPC) of the Bank of Ghana reduced the policy rate from 18.0 percent citing sustained disinflation and expectations that price pressures will remain contained in the near term.
Announcing the decision after the Committee’s meeting, Bank of Ghana Governor Johnson Asiama said the move was supported by a steady decline in headline inflation, which has fallen well below the central bank’s medium-term target range.
“Recent inflation outcomes provide adequate policy space to support economic activity, while remaining consistent with our primary mandate of price stability,” Asiama said.
Data from the Ghana Statistical Service showed headline inflation declined to 5.4 percent in January 2025, easing sharply and falling below the Bank of Ghana’s target band of 8 percent plus or minus two percentage points. The central bank said inflation expectations have also softened, reflecting tighter fiscal discipline, improved supply conditions, and relative stability in the foreign exchange market.
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The rate cut marks a continuation of the central bank’s gradual policy easing following a prolonged tightening cycle aimed at curbing inflation, stabilising the cedi, and restoring macroeconomic confidence after recent economic stress.
Analysts said the decision signals growing confidence among policymakers that inflation risks are receding, even as global uncertainties persist.
“The MPC’s decision reflects increasing comfort with the inflation trajectory,” said an Accra-based economist. “The key question now is how quickly lower policy rates will feed through to commercial lending rates.”
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The central bank said the reduction in the policy rate is expected to transmit to market interest rates over time, lowering borrowing costs for businesses and households. Authorities hope easier financing conditions will stimulate private sector investment, support job creation, and bolster economic growth.
High interest rates have weighed heavily on Ghana’s private sector, particularly small and medium-sized enterprises, which have struggled with elevated credit costs over the past two years.
The MPC cautioned, however, that risks to the inflation outlook remain, including potential commodity price volatility, global financial market shocks, and domestic supply-side pressures. The Committee said it would continue to closely monitor both domestic and external developments and stand ready to adjust policy as needed.
“While the disinflation process has been encouraging, the MPC remains vigilant and committed to taking appropriate policy actions to preserve macroeconomic stability,” Asiama said.
Ghana’s economy has shown signs of gradual recovery following a period of debt restructuring and fiscal consolidation under an International Monetary Fund-supported programme. Improved external balances, stronger export receipts, and rising international reserves have helped stabilise the currency and ease inflationary pressures.
The central bank said recent macroeconomic gains must be sustained through continued fiscal discipline, structural reforms, and coordinated policy implementation.
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Market participants will now watch for signals on whether further rate cuts could follow later in the year if inflation remains subdued and growth conditions weaken.
For now, the MPC said its decisions would remain data-dependent, balancing the need to support economic activity with the imperative of maintaining price and financial stability.
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