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The Monetary Policy Committee (MPC) of the Bank of Ghana has announced a major cut in the benchmark policy rate, slashing it by 350 basis points (3.5 per cent) from 25 per cent to 21.5 per cent. The decision, announced after the 126th MPC meeting, was taken to support the ongoing disinflation process and boost economic activity in the country.
Governor of the Bank of Ghana, Dr. Johnson Asiama, who addressed journalists at a press conference, said the committee was confident that inflation would continue to ease in the near term. “Given the current state of macroeconomic conditions, the view of the committee was that inflation will continue to ease in the near term,” he explained.
According to him, headline inflation is expected to fall to within the medium-term target band of 8 per cent, plus or minus 2 per cent, by the end of the fourth quarter of 2025. This outlook is supported by both global and domestic economic developments, which he said remain broadly positive despite lingering uncertainties.
Dr. Asiama pointed out that the earlier fears of a global economic slowdown have not fully materialised. Instead, growth has been resilient across several regions, supported by easing trade tensions, robust export performance, and expansionary policies in some advanced economies. The International Monetary Fund (IMF) recently revised its global growth projection for 2025 to 3.0 per cent, up from an earlier forecast of 2.8 per cent.
He noted, however, that risks remain, particularly from geopolitical uncertainties, high tariffs, and projected declines in global trade volumes. On the positive side, global inflation is expected to decline further due to lower food and energy prices and slower employment growth, while financing conditions have improved following declines in policy rates and bond yields worldwide.
On the domestic front, Ghana’s economy has continued to show strong performance. The latest figures from the Ghana Statistical Service showed that in the second quarter of 2025, the economy recorded real GDP growth of 6.3 per cent, compared to 5.7 per cent in the same quarter of 2024. Excluding oil, growth was even stronger at 7.8 per cent.
The services sector led the expansion, posting a growth rate of 9.9 per cent, while the agriculture sector grew by 5.2 per cent. According to the Governor, these figures reflect the underlying strength of the economy, particularly in non-oil sectors.
High-frequency indicators released by the Bank of Ghana also confirmed the positive momentum, with business confidence improving as companies reported meeting short-term targets and expressing optimism about industry prospects. Although consumer confidence softened slightly, it remained relatively strong.
Interest rates in the money market have also begun to decline following the policy rate cut. Yields on money market instruments have dropped significantly, while average lending rates are easing, a development expected to lower the cost of credit for businesses and households.
On the external front, Ghana’s balance of payments has been supported by strong export performance and higher reserve accumulation. These factors strengthened the cedi against major international currencies in the first half of the year, with the local currency appreciating by as much as 21 per cent against the U.S. dollar up to mid-September. However, the cedi has come under pressure in recent weeks due to rising demand for foreign exchange, which slightly reduced the scale of appreciation.
Dr. Asiama assured that the MPC would continue to closely monitor macroeconomic trends and take necessary steps to reinforce the disinflation process while ensuring financial stability. “The committee will remain vigilant and stands ready to take further action as needed to support growth and maintain stability,” he said.
For many analysts, the latest cut in the policy rate signals a new phase of monetary easing aimed at stimulating credit growth and economic expansion, while ensuring inflation remains on a downward path. Businesses are expected to benefit from cheaper credit, while households may also find borrowing costs reduced in the coming months.
The Bank of Ghana’s decision comes at a time when several central banks across the world are also lowering interest rates in response to easing inflationary pressures, improved capital inflows, and a more stable global financial environment. For Ghana, the policy shift could provide fresh momentum to sustain economic recovery and consolidate stability in the financial sector.
