Bank of Ghana Slashes Interest Rate to 25% as Inflation Drops, Sparking Price Reductions

The Bank of Ghana (BoG) has significantly cut its benchmark interest rate by 300 basis points, reducing it from 28% to 25%. This aggressive monetary policy move—the sharpest in recent years—signals renewed confidence in Ghana’s ongoing macroeconomic recovery. The central bank aims to lower borrowing costs and stimulate investment and spending in a climate of declining inflation.

The interest rate cut is already having ripple effects in the business sector. The Association of Ghana Industries (AGI), a key stakeholder in the private sector, welcomed the move and suggested that prices of goods and services may drop further. Tsonam Akpeloo, AGI’s Greater Accra Regional Chairman, noted that market prices are already falling and promised continued reductions if current economic trends hold.

Akpeloo emphasized the importance of government support in sustaining the recovery. He called for stronger enforcement against smuggling, which undercuts local manufacturers, and urged policymakers to maintain macroeconomic stability. These steps, he believes, will strengthen local industry and boost consumer confidence.

The BoG’s decision comes at a time when inflation indicators are trending downward. Ghana’s Producer Price Inflation (PPI) dropped to 5.9% in June 2025, while annual consumer inflation eased to 13.7%. These improvements have created a more favorable environment for businesses, making it easier for them to access credit and reduce operational costs.

In May, Ghanaian business groups had pledged to reduce prices within 60 days, following talks with the Minister for Trade, Agribusiness and Industry. With the central bank’s supportive monetary policy and falling inflation, there is renewed pressure on these groups to honor that commitment—offering hope for increased affordability and job creation in the near term.

Source: Citi newsroom