BoG cuts policy rate to 21.5% as inflation drops to single digits

The Bank of Ghana has announced a 350-basis-point cut in its policy rate to 21.5 percent, following significant progress in reducing inflation and stabilizing the economy.

Governor Dr. Johnson Pandit Asiama, speaking at a post-Monetary Policy Committee (MPC) engagement with heads of banks in Accra, said the rate cut marked the third in 2025 and reflected confidence that inflation would stay within the target band of 8 ± 2 percent by year-end.

“Inflation has continued its remarkable downward path, falling to 9.4 percent in September 2025, marking the first return to single digits in four years,” Dr. Asiama stated. “This performance underscores the growing credibility of our policy framework and the renewed confidence of markets,” he added.

Food inflation, he noted, dropped to 11 percent while non-food inflation eased to 8.2 percent. The economy expanded by 6.3 percent in the second quarter, driven by growth in services and agriculture, with non-oil GDP rising by 7.8 percent.

Externally, Ghana recorded a trade surplus of US$6.2 billion in the first eight months of 2025, with international reserves reaching US$10.7 billion, equivalent to 4.5 months of import cover.

The cedi also appreciated by 21 percent year-to-date, making it one of the best-performing currencies globally.

Dr. Asiama said Treasury bill rates had fallen from 13.4 percent in July to 10.3 percent in August, while lending rates declined from 26.6 percent to 24.2 percent.

“We expect further improvement as banks realign their pricing models to reflect the easing stance,” he remarked.

He praised the banking sector’s resilience, noting a Capital Adequacy Ratio of 17.7 percent and a decline in non-performing loans to 20.8 percent.

The central bank, he said, would soon issue new directives on liquidity risk management and stress testing.

“The return to single-digit inflation marks a new chapter in Ghana’s economic recovery,” the Governor noted. “Our collective responsibility now is to sustain discipline, strengthen the financial system, and ensure that stability translates into jobs and real growth.”

At the start of 2025, the Bank of Ghana maintained a tight monetary stance as inflation remained elevated.

In March 2025, BoG delivered a surprise hike, raising its benchmark monetary policy rate by 100 basis points to 28 %, citing persistent inflation pressures.

Through the first half of the year, the rate held at 28 % as the central bank monitored inflation developments and exchange rate risks.

By late July, with evidence that inflation was cooling, the BoG initiated an easing phase. On 30th July 2025, the Monetary Policy Committee cut the policy rate by 300 basis points from 28 % to 25 %, a record single-meeting cut, citing improved macro indicators and a softening inflation trajectory.

On 17th September 2025, the BoG undertook another dramatic cut, slashing the benchmark rate by 350 basis points to 21.5 %, bringing cumulative cuts within a short period to 650 basis points.

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The rationale for these cuts was grounded in sustained declines in inflation, an improved macro outlook, and confidence that inflation could reach the central bank’s target of 8 % ± 2 by year’s end.