Accra: The Monetary Policy Committee (MPC) of the Bank of Ghana has announced a significant reduction in the monetary policy rate, slashing it by 350 basis points to 21.5 percent from the previous rate of 25 percent. The decision was driven by the ongoing disinflation process.
According to Ghana News Agency, Dr. Johnson Asiama, the Governor of the Bank of Ghana, explained during a press conference that the committee anticipates continued easing of inflation in the near term. This outlook was arrived at after the 126th MPC meeting, where recent economic developments were evaluated, and risks to the inflation and growth outlook were assessed.
Dr. Asiama expressed confidence that headline inflation is expected to fall within the medium-term target of 8 percent, plus or minus 2 percent, by the end of the fourth quarter. Despite earlier projections of a global economic slowdown, growth has shown resilience, buoyed by factors such as easing trade tensions, robust exports, improved credit conditions, and fiscal expansion in certain advanced economies.
The Governor highlighted that the International Monetary Fund (IMF) has revised its global growth projections for 2025 to 3.0 percent, up from the previous forecast of 2.8 percent. However, he cautioned that geopolitical uncertainties, high tariffs, and a projected decline in global trade could pose challenges to growth prospects in the near term.
Global inflation is expected to decline due to lower food and energy prices and a slowdown in employment growth. Additionally, global financing conditions have improved, supported by declining policy rates, lower long-term bond yields, and a notable rebound in portfolio flows to emerging markets and developing economies.
Domestically, Dr. Asiama noted that Ghana's economy continues to demonstrate strong growth, primarily driven by the services and agricultural sectors. The latest figures from the Ghana Statistical Service reveal a real GDP growth of 6.3 percent in the second quarter of 2025, compared to 5.7 percent in the same period of 2024. Excluding oil, GDP growth was even higher at 7.8 percent.
Dr. Asiama also pointed out that interest rates in the money market are declining in response to the recent policy rate cut, leading to lower yields on money market instruments. This trend is gradually easing average lending rates, which is expected to reduce the cost of credit in the near term.
On the currency front, the cedi has strengthened against major trading currencies due to strong external sector performance and increased reserve accumulation. However, it faced demand pressures, resulting in a cumulative appreciation of 21.0 percent against the U.S. dollar through September 12, 2025.
The Committee remains vigilant, committed to monitoring macroeconomic developments, and ready to take appropriate policy actions to reinforce the disinflation process as necessary.
