The Bank of Ghana (BoG) has come under scrutiny after announcing a significant 300 basis point cut in its policy rate, lowering it from 28% to 25% at its July 2025 Monetary Policy Committee (MPC) meeting. The central bank cited sustained disinflation and improved macroeconomic indicators, including falling inflation and a strengthening currency, as justification for the move.
However, Professor Patrick Asuming, a respected economist and finance lecturer at the University of Ghana Business School, expressed surprise at the scale of the reduction. In an interview with Citi Business News, he described the cut as overly aggressive and suggested a more conservative step—such as a 100 basis point adjustment or holding the rate steady—would have been more prudent.
Professor Asuming emphasized that, although inflation has been easing, the economy remains in a delicate phase of recovery. He acknowledged the current momentum in disinflation, supported by factors such as currency appreciation and anticipated improvements in food supply during the harvest season, but warned that the full effects of these drivers have yet to materialize.
Despite his criticism, the economist does not foresee a reversal in the downward inflation trend as a result of the rate cut. Nevertheless, he believes that acting more cautiously could have allowed policymakers to better assess the resilience of recent economic improvements and ensured a stronger foundation before easing monetary policy further.
The BoG’s decision was made in the context of headline inflation falling to 13.7% in June—down from 18.4% in May, and the Ghanaian cedi gaining strength against key foreign currencies. The central bank has stated that it will continue to monitor macroeconomic conditions closely to inform future rate decisions.
Source: Citi newsroom