Bank of Ghana Slashes Interest Rate to 21.5% as Inflation Declines
The Bank of Ghana (BoG) has cut its benchmark policy rate by a record 350 basis points, lowering it from 25% to 21.5%, as the country continues to experience a sharp decline in inflation. This is the second consecutive major reduction this year, following a 300-basis-point cut in July.
Why the Rate Cut?
The central bank’s Monetary Policy Committee (MPC) cited sustained disinflation and improved economic stability as the key reasons for the decision. Ghana’s annual inflation rate dropped to 11.5% in August, the lowest level since October 2021.
BoG Governor Johnson Asiama noted that the trend reflects “improved inflation expectations and stronger macroeconomic stability,” adding that inflation is expected to fall within the bank’s target range of 6–10% by year-end.
Impact on Businesses and Consumers
The rate cut is likely to bring:
- Cheaper loans for households and small businesses as commercial banks adjust lending rates.
- Increased investment opportunities, as lower borrowing costs encourage business expansion.
- Relief for mortgage holders and other debt-servicing consumers.
However, experts caution that interest rate cuts must be carefully balanced to avoid excessive borrowing that could fuel new inflationary pressures.
Economic Outlook
- The Ghanaian economy has shown signs of recovery, with improved currency stability, falling inflation, and positive growth projections for 2026.
- International investors are expected to monitor whether Ghana can maintain fiscal discipline while easing monetary policy.
- Economists predict that if inflation continues its downward trend, further policy adjustments may be considered in 2026.
Bottom Line
The Bank of Ghana’s move signals confidence in the economy’s resilience and is expected to bring relief to both businesses and consumers. The challenge, however, remains ensuring that growth continues while maintaining fiscal and monetary stability.
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Source: raylizaghana.com
