Ghana Poised for Major Interest Rate Cut as Inflation Falls to Four-Year Low

Ghana is preparing for what could be its third consecutive major interest rate cut, as the country’s inflation continues to cool faster than anticipated. With price growth now expected to drop below the central bank’s target band by year-end, policymakers are signaling confidence that economic stability is returning. The next monetary policy announcement is set for Wednesday, and all eyes are on how far the Bank of Ghana will go.

According to a Bloomberg poll of economists, Governor Johnson Asiama is widely expected to reduce the benchmark policy rate by 350 basis points to 18%. Speaking at the opening of the Monetary Policy Committee meeting on Monday, Asiama noted that real interest rates remain high, giving enough room for a “carefully calibrated easing cycle.” He added that inflation has eased faster than expected and is likely to settle between 4% and 6% by the end of 2025, before stabilizing within the target band in 2026.

Ghana’s inflation rate first returned to the central bank’s 6% to 10% target range in September and has since fallen to an impressive four-year low of 8%. Analysts say inflation is poised to drop even further in November, potentially remaining below expectations into 2026. Mark Bohlund, senior credit analyst at REDD Intelligence, believes the central bank will indeed opt for a 350-basis-point cut.

The country’s improving economic picture has been supported by a surge in cocoa and gold prices, which has strengthened the cedi by nearly one-third against the dollar this year. While many analysts anticipate an aggressive rate cut, some foresee a more cautious move. Courage Boti of GCB Bank expects the central bank to cut by 200 basis points, arguing that it would help “consolidate the stability” gained so far.

Finance Minister Cassiel Ato Forson has also emphasized fiscal discipline in his recent budget speech, reaffirming the government’s commitment to stability as Ghana prepares to exit its three-year IMF bailout program. The government projects a primary budget surplus of 1.5% of GDP in 2026, alongside stronger economic growth of at least 4.8%, up from an estimated 4% this year. Inflation, meanwhile, is expected to end 2026 at about 8%, supporting optimism for a more stable macroeconomic environment.

source: business day