Accra: Ghana may see lower interest rates soon, as ongoing disinflation and currency stability prompt cautious optimism among commercial banks. Speaking at the 11th Absa-UPSA Law School quarterly banking roundtable in Accra, Mr. John Awuah, Chief Executive Officer of the Ghana Association of Banks, said the expected change hinges on the upcoming Monetary Policy Committee meeting, scheduled for July 28, 2025.
According to Ghana News Agency, Mr. Awuah remarked on the current state of inflation, noting it stands at 13.7 percent. He expressed the perspective that the central bank should reconsider the monetary policy rate in light of these economic conditions. The decline in inflation and the appreciation of the Cedi are seen as beneficial developments for business planning and potential reductions in bank lending rates.
Mr. Awuah elaborated on the determination of the Ghana Reference Rate (GRR), which influences commercial banks' lending rates. This rate is shaped by several critical factors, including the monetary policy rate (MPR), interbank rate, treasury bill rate, and inflation. He noted that with the current T-bill rate at 14.14 percent and inflation at 13.7 percent, a southward movement in the MPR could lead to a decrease in lending rates.
The implication of a downward adjustment in the MPR, as Mr. Awuah explained, would be a corresponding reduction in banks' lending rates. He identified the GRR at 28 percent as a significant factor and highlighted the potential impact of an aggressive MPR cut. A shift in the policy rate could lead to more favorable lending conditions, which he indicated could alleviate some of the challenges businesses face with pricing and planning, potentially fostering growth and job creation.
Professor Ernest Kofi Abotsi, Dean of UPSA Law School, stated that the roundtable aimed to facilitate legal and regulatory discourse between academia and policymakers, particularly in response to the banking sector crisis. This year's theme, 'Ghana's Legal Tender, Monetary Policy, and the Rising Cedi,' was chosen to shed light on the Cedi's appreciation and help the public better understand key economic developments, thereby informing policy decision-making.
