Ghana’s central bank has made its largest interest rate cut on record, lowering the benchmark rate from 28% to 25% as the country’s inflation rate continues to decline faster than expected.
The move, according to Businessday’s reports, signals a shift toward monetary easing in West Africa’s second-largest economy, with the Bank of Ghana hinting at further reductions if the downward inflation trend holds.
Announcing the decision in Accra yesterday, Governor Johnson Asiama said the Monetary Policy Committee (MPC) decided by majority vote.
This was the second MPC meeting in July, following an emergency session earlier in the month that delayed any policy announcement until more data became available.
“Looking ahead, the committee will continue to assess incoming data and likely reduce the policy rate further should the disinflation trend continue,” Asiama said.
He noted that headline inflation, which has fallen to 13.7% from 18.4% in May, is now projected to reach the Bank’s medium-term target of 8% (±2 percentage points) by the end of 2025—earlier than initially forecast.
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The sharp fall in inflation has been aided by the cedi’s strong rally—appreciating 40% against the US dollar this year—driven by higher gold prices, tighter fiscal policies, an ongoing IMF reform program, and recent credit rating upgrades.
Ghana, Africa’s top gold producer, has also benefited from an increase in foreign exchange reserves and a crackdown on foreign currency pricing in government contracts.
Meanwhile, treasury bill rates have dropped significantly, signaling improved investor confidence.
This record rate cut comes amid efforts to stabilize the economy, restore debt sustainability, and maintain currency strength.
Analysts believe the move opens the door for further economic stimulus as Ghana navigates its recovery path under the IMF-supported reform framework.
Image Credit: Bloomberg
