BoG cuts benchmark rate by 250bps to 15%

The Bank of Ghana (BoG) has announced a major shift in monetary policy, reducing its benchmark interest rate by 250 basis points to 15.50 per cent, marking a move from stabilisation toward fostering stronger economic growth and job creation.

The decision, taken by the Monetary Policy Committee (MPC) on Wednesday, follows a remarkable turnaround in Ghana’s macroeconomic conditions. In its press release, the MPC highlighted that “headline inflation declined sharply from 23.8 per cent in December 2024 to 5.4 per cent in December 2025,” attributing the disinflation to tight monetary policy, fiscal consolidation, and currency appreciation.

Economic growth has strengthened alongside falling inflation. The MPC noted that “overall Real GDP expanded at an annual rate of 6.1 per cent” in the first three quarters of 2025, driven by services and agriculture. Business and consumer confidence improved, with respondents citing easing inflation, a stable currency, and prospects for lower borrowing costs.

The committee also pointed to a significantly improved external position. Gross International Reserves rose to US$13.8 billion, providing 5.7 months of import cover, while the cedi appreciated 40.7 per cent against the US dollar in 2025. Fiscal health was restored as public debt fell to 45.5 per cent of GDP at end-November 2025, down from 63.1 per cent a year earlier.

“With stability largely achieved, the focus of policy is gradually shifting toward consolidating these gains and supporting stronger real sector recovery, job creation, and improved financial intermediation,” the MPC said.

While acknowledging risks from utility price adjustments and commodity market volatility, the committee noted that “current monetary conditions remain tight relative to prevailing inflation dynamics.” The rate cut is expected to further lower borrowing costs, building on a trend that has already seen average lending rates fall to 20.45 per cent from 30.25 per cent during 2025.

The MPC concluded that sustaining Ghana’s economic progress “will hinge on disciplined fiscal policy, strong policy coordination, and targeted agricultural interventions.”