The Bank of Ghana has announced a significant reduction in its benchmark interest rate, lowering it by 350 basis points to 18%. This marks the third consecutive rate cut as the country’s inflation continues its rapid decline, signaling improving economic conditions.
Governor Johnson Asiama, speaking on Wednesday in Accra, explained that the Monetary Policy Committee (MPC) voted overwhelmingly in favor of easing rates. He emphasized that current high real interest rates provide room to boost economic recovery while maintaining confidence in Ghana’s inflation outlook. “The prevailing high real interest rates provided some scope to ease monetary policy to further boost the growth recovery efforts,” Asiama stated.
Ghana’s inflation trajectory has been one of the fastest reversals on the continent. After hitting a two-decade high of over 54% in December 2022, inflation returned to the Bank of Ghana’s target range of 6–10% by September 2025 and further declined to 8% in October, a four-year low. The central bank expects a stable inflation profile to continue well into the first half of 2026.
The timing of Ghana’s rate cut comes shortly after Nigeria’s central bank opted to retain its monetary policy rate at 27%, despite falling inflation. Analysts noted that the Nigerian decision reflects caution, highlighting the lagged impact of monetary adjustments on the broader economy. Meanwhile, industry bodies like the Manufacturers Association of Nigeria (MAN) have called for further rate reductions to lower borrowing costs and encourage investment, citing challenges such as high production costs and limited access to affordable credit.
The Bank of Ghana’s latest move is expected to stimulate borrowing, encourage investment, and further strengthen confidence in the nation’s economic recovery. With inflation steadily falling and real interest rates supportive, businesses and consumers may benefit from lower borrowing costs, paving the way for sustainable growth in Ghana’s economy.
source: Dailytrust