Banks Anticipate Policy Rate Cut as BoG’s MPC Meeting Begins
The Ghana Association of Banks (GAB) is positioning itself for a potential cut in the central bank’s benchmark interest rate as the Bank of Ghana’s Monetary Policy Committee (MPC) convenes for its 123rd meeting today, Monday, March 24, 2025.
With the policy rate holding at 27% and inflation easing to 23.1% in February, GAB President Kwamina Asomaning argues that economic conditions now support a shift in monetary policy. Speaking at the Association’s 2025 Cocktail and Networking Session, he cited the stabilisation of the cedi and a slowdown in food price inflation as key indicators that could shape the BoG’s decision-making.
“The policy rate, in many ways, follows inflation. While inflation remains elevated at around 23%, the pace of disinflation has slowed. What markets are watching is whether expectations have moderated sufficiently to warrant a move from policymakers,” Mr Asomaning said.
He noted that while food price pressures persist, their rate of increase has decelerated, and currency volatility has subsided. “If policymakers are comfortable that inflation expectations are under control, there is a strong case for lowering the policy rate. Without such a move, interest rates will remain elevated, placing further strain on the economy,” he added.
The MPC’s decision will be closely scrutinised, given the broader macroeconomic backdrop. A continued decline in Treasury bill rates, alongside an improving economic outlook, has strengthened calls for a more accommodative stance from the central bank. However, inflation remains well above the government’s target of 11.9% for the year, and policymakers may be reluctant to loosen policy too soon.
The three-day meeting, chaired for the first time by newly appointed Governor Dr. Johnson Asiama, will conclude on March 26, with the central bank set to announce its decision on Friday, March 28. Markets will be looking for signals on the future trajectory of interest rates and the broader direction of Ghana’s monetary policy.
