Central Bank Cuts Policy Rate to 18% on Easing Inflation Trend
The Monetary Policy Committee (MPC) of the Bank of Ghana (BoG), has reduced its monetary policy rate by 350 basis points (3.5%).
With the reduction in the benchmark mark interest rate, the monetary policy rate of the Central Bank now stands at 18% from the previous rate of 21.5%.
Announcing the new policy rate, Governor of the Central Bank, Dr Johnson Asiama noted that the reduction is on the basis of continued easing of headline inflation rate with expectations of inflation to further decline to between 4-6% by close of year.
The decline of headline inflation to the band of 4-6% will be significantly lower than the Bank of Ghana’s medium-term target band of 8+-10%.
Given the reduction in the policy rate, interest rates on loans to businesses and households are expected to witness a correspondent decline, thereby moderating the cost of capital to businesses and households.
Announcing the new policy rate, the Governor noted, “In taking the policy decision, the view of the Committee was that overall macroeconomic conditions have broadly improved. Given the anticipated significant decline in inflation by the end of the year, the tight monetary policy stance, the significant build-up of reserves which is providing anchor for exchange rate stability, the Bank projects a continued stable inflation profile around the target and well into the first half of 2026.”
“This is against the backdrop that current risks in the outlook to shift the path of inflation away from target have moderated significantly. Hence, the prevailing high real interest rates provides some scope to ease policy to further boost the growth recovery efforts. Given these considerations, the Committee, by a majority decision, voted to lower the Monetary Policy Rate further by 350 basis points to 18.0 percent. The Committee will continue to monitor developments and take the appropriate policy decisions to ensure sound and stable macroeconomic conditions,” the Governor added.
