The Bank of Ghana has reduced its Monetary Policy Rate by 250 basis points to 15.5 percent, citing a sharp decline in inflation, improved macroeconomic stability, and strengthening economic growth.
The decision was taken by a majority of members of the Monetary Policy Committee (MPC) at its 128th regular meeting held from January 26 to 28, 2026, according to a press release issued on Tuesday.
Headline inflation fell significantly from 23.8 percent in December 2024 to 5.4 percent in December 2025, supported by tight monetary policy, fiscal consolidation, and a stronger cedi. The Bank said inflation expectations across households, businesses, and the financial sector remain well anchored, while underlying inflation pressures have eased.
“The disinflation process has been faster and more broad-based than anticipated,” the Committee noted, adding that stability has largely been achieved, allowing policy to gradually shift toward supporting real sector recovery and job creation.
Economic growth strengthens
On the domestic front, the Bank reported that economic growth gained momentum in 2025. Data from the Ghana Statistical Service showed real Gross Domestic Product (GDP) growth of 6.1 percent in the first three quarters of 2025, compared with 5.8 percent over the same period in 2024. Non-oil GDP growth also improved to 7.5 percent from 5.8 percent, driven mainly by the services and agriculture sectors.
The Bank’s Composite Index of Economic Activity rose by 8.8 percent in November 2025, up from 1.5 percent in November 2024, reflecting stronger international trade, private sector credit growth, industrial production, and consumption. Consumer and business confidence surveys also pointed to improved optimism, supported by easing inflation, currency stability, and prospects of lower borrowing costs.
Interest rates ease, credit rebounds
Money market conditions loosened considerably during the year. The 91-day Treasury bill rate declined to 11.08 percent in December 2025 from 27.73 percent a year earlier. Average lending rates fell to 20.45 percent, down from 30.25 percent, following a cumulative 900 basis-point reduction in the policy rate in 2025.
As a result, real private sector credit growth rebounded to 13.1 percent, compared with 2.0 percent in 2024.
Fiscal and external positions improve
Fiscal operations showed strong consolidation. By end-November 2025, the overall fiscal deficit on a commitment basis stood at 0.5 percent of GDP, well below the target of 3.5 percent. The primary balance recorded a surplus of 2.8 percent of GDP, while public debt declined sharply to 45.5 percent of GDP, from 63.1 percent a year earlier.
The external sector also recorded a robust performance. Ghana ended 2025 with a provisional current account surplus of US$9.1 billion, up from US$1.5 billion in 2024, supported by strong gold exports, higher private transfers, and lower services and income payments. Gross international reserves rose to US$13.8 billion, equivalent to 5.7 months of import cover.
The strong external position helped stabilise the cedi, which appreciated by 40.7 percent against the US dollar in 2025, compared with a depreciation of 19.2 percent in 2024. The currency has remained relatively stable in the first weeks of 2026.
Outlook
The MPC said inflation is expected to remain within the medium-term target, barring risks from utility price adjustments and commodity market volatility. Economic growth is projected to remain strong in 2026, though the Committee cautioned that sustained gains will depend on fiscal discipline, strong policy coordination, and measures to contain food inflation.
“The Committee will continue to monitor developments closely and take appropriate policy actions to ensure that the gains from macroeconomic stability translate into sustainable growth,” the statement said.
The next MPC meeting is scheduled for March 16–18, 2026, with the policy decision to be announced on March 18.
Source: www.kumasimail.com
