BoG cuts monetary policy rate from 21.5% to 18%

The Bank of Ghana has reduced the Monetary Policy Rate by 350 basis points to 18 percent.

Addressing the media, the Governor of the Bank of Ghana, Dr. Johnson Asiama, explained that there have been several factors that contributed to the reduction from 21 to 18.

“Budget performance over the first nine months was marked by strong fiscal consolidation. Revenue and grants fell below the target by 4.7 percent, while expenditure was below the target by 15 percent. This resulted in an overall fiscal deficit on commitment basis of 1.5 percent of GDP, better than the target deficit of 3.2 percent of GDP.

“The primary balance on commitment basis, recorded a surplus of 1.6 percent of GDP, compared with the target of 1.0 percent. As at end-October 2025, the total public debt stock was at 45.0 percent of GDP, compared with 61.8 percent of GDP at end-December 2024. The decline in the public debt was attributed to effective debt management, reduced borrowing costs, and appreciation of the local currency”, the Governor added.

According to him, deposit money banks remain sound, profitable and well capitalised. The financial soundness indicators, including solvency, profitability, asset quality, and efficiency indicators all point to relative improvement in year-on-year terms.

“The Non-Performing Loan (NPL) ratio declined to 19.5 percent in October 2025, from 22.7 percent in October 2024, driven by pickup in bank credit and contraction in the stock of NPLs. However, credit risks remain elevated and looking ahead, policy actions to recapitalise the few undercapitalised banks and full implementation of the new regulatory guidelines aimed at reducing NPLs would further strengthen the banking industry.

“The external sector conditions remain favourable. The current account improved significantly in the first nine months of 2025 to a surplus of US$3.8 billion compared to US$553.6 million for the same period in 2024. The trade surplus increased to US$7.5 billion on the back of a surge in gold and cocoa export earnings. Private inward transfers remained high at U$6.0 billion at the end of the third quarter.”

Dr. Asiama further disclosed that the current account surplus, together with favourable balances in the capital and financial accounts, translated into an overall balance of payment surplus of US$1.8 billion and supported an accumulation of reserve assets to US$11.4 billion in October 2025, equivalent to 4.8 months of import cover.

“Reserves are projected to increase further by year end. The reserve accumulation efforts have helped provide cushion for the currency, with the cedi strengthening against the major trading currencies. In the year to 21st November 2025, the cedi recorded an appreciation of 32.2 percent against the US dollar.

“Given these considerations, the Committee, by a majority decision, voted to lower the Monetary Policy Rate further by 350 basis points to 18.0 percent. The Committee will continue to monitor developments and take the appropriate policy decisions to ensure sound and stable macroeconomic conditions.”