BoG Likely to Cut Policy Rate by 300 Basis Points to 25% Amid Sharp Drop in Inflation
The Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) is widely expected to cut the benchmark policy rate by 300 basis points to 25% at its upcoming meeting, driven by a significant decline in inflation and improved macroeconomic indicators.
This follows the sharp fall in headline inflation to 13.7% in June 2025, from the previous month’s 20.6%, strengthening the case for monetary policy easing.
“We maintain a dovish outlook for the July MPC meeting, raising our expected cut in the policy rate to at least 300 basis points from our initial anticipation of at least a 200 basis points cut,” IC Research said in its latest commentary on the economy.
The real policy rate—calculated as the nominal policy rate adjusted for inflation—expanded to 14.3% in June 2025, up from 9.6% in May 2025. With core inflation now firmly in single digits, IC Research believes the MPC has sufficient room to implement a deeper policy rate cut beyond its revised forecast.
“However, we opt to stay cautious on the expected dovishness in order to consolidate FX stability and avert a second-round effect from a likely higher fuel levy in the third quarter of 2025,” IC Research added.
At its last meeting in May 2025, the MPC held the policy rate steady at 28%, citing the need to consolidate the gains made in taming inflation and stabilising the local currency. Governor of the central bank, Dr Johnson Asiama, noted that the decision was underpinned by forecasts showing a continued easing in inflation, supported by tight monetary policy, relative exchange rate stability, and ongoing fiscal consolidation efforts.
The latest developments in the financial markets, including declining Treasury yields and lending rates, reinforce expectations of a policy rate reduction. Analysts say this could help further reduce the cost of credit to businesses and consumers, spurring economic growth.
The 125th MPC meeting is scheduled to take place from July 28 to July 30, 2025.
