Prof Godfred Bokpin Predicts 3%-5% Cut in Policy Rate at 125th MPC Meeting
Economist and Professor of Finance at the University of Ghana Business School, Professor Godfred Bokpin, is projecting a 3% to 5% cut in the Bank of Ghana’s monetary policy rate at the Central Bank’s 125th Monetary Policy Committee (MPC) meeting scheduled for July 28 to July 30, 2025.
Speaking to NorvanReports on the sidelines of the launch of the “Sustainable Debt Management in Ghana” report by the Economic Governance Platform (EGP) and Open Society Foundations (OSF) on Thursday, July 10, 2025, Prof Bokpin stressed that the Central Bank has little choice but to ease its policy stance given the current macroeconomic developments.
“They have no choice. In my estimation, I’m expecting a rate cut between 300 and 500 basis points,” he asserted.
Explaining his position, Prof Bokpin highlighted the widening gap between the inflation rate, which has declined sharply to 13.7%, and the monetary policy rate which currently stands at 28%.
“If you look at the gap, where inflation is right now, and where the policy rate is, it’s abnormal. Inflation has come down significantly, but the policy rate remains high. Just as there was pressure on traders to reduce prices when the cedi strengthened, there must also be similar pressure on the Bank of Ghana to reduce the policy rate because it is also a price,” he remarked.
He further noted that the prevailing high policy rate is difficult to justify in light of the significant drop in both headline and core inflation.
Prof Bokpin also suggested that the Central Bank reviews its inflation forecasting model, questioning whether the Bank’s previous decisions adequately captured the downward trajectory of inflation.
“The policy rate has a signaling effect. It should stay ahead of market expectations and guide investor sentiment. With inflation now at 13.7%, I think the Bank of Ghana has enough room to bring the rate down,” he said.
Meanwhile, the Central Bank itself has given indications of a possible rate cut, as reflected in the declining yields on its short-term instruments, popularly known as BoG Bills, in recent auctions.
The anticipated policy rate reduction, if implemented, is expected to ease financing conditions, lower interest rates across the economy, and support ongoing efforts to sustain economic recovery.
