As the Bank of Ghana (BoG) prepares to announce its latest monetary policy decision today, the Association of Ghana Industries (AGI) is calling for a downward review of the policy rate, citing favourable macroeconomic conditions.

The AGI believes a reduction in the policy rate will be crucial in easing the cost of borrowing and revitalising the industrial sector, which has long grappled with high lending rates.

In January, the Monetary Policy Committee (MPC) of the BoG increased the policy rate by 100 basis points, bringing it to 28 percent. This decision was driven by the persistent threat of inflation, which the Central Bank viewed as a significant risk to macroeconomic stability. However, recent developments suggest that the economic environment may be improving.

Speaking to the media ahead of the policy announcement, AGI Chief Executive Officer Seth Twum Akwaboah expressed cautious optimism. According to him, several macroeconomic indicators now point towards stability, creating room for the BoG to ease its monetary stance.

“I think that MPC is always based on parameters and improvement and the macroeconomic environment. Therefore, we definitely expect some improvement in that area. The MPC to a large extent determines the interest rate because the banks rely on it.”
Seth Twum Akwaboah

Stabilising Cedi and Slowing Inflation

One of the key factors boosting AGI’s confidence in a potential policy rate cut is the recent appreciation of the Ghanaian cedi against major foreign currencies, particularly the US dollar. A more stable currency often signals improved investor confidence and reduced inflationary risks, two critical benchmarks for adjusting interest rates.

“With the improvement in the macroeconomic environment, with the improvement in the cedi…the stability we are experiencing, we also expect that policy rate will improve to reflect the interest rate so that companies can benefit.”
Seth Twum Akwaboah

Additionally, recent data from the Ghana Statistical Service suggests a gradual decline in inflationary pressures, further reinforcing AGI’s call for a more accommodative policy stance. A lower policy rate, AGI believes, will translate into reduced lending rates, giving businesses the financial space they need to expand and create jobs.

Easing the Cost of Doing Business

For Ghana’s industrial sector, high interest rates remain a major obstacle to growth. Businesses continue to struggle with elevated borrowing costs, which constrain investments and increase the cost of production. The AGI has repeatedly argued that a more business-friendly monetary policy is needed to stimulate industrial output and enhance competitiveness.

“We expect a downward review, all things being equal,” Akwaboah asserted. “That is the way to reduce cost of production and translate it into lower pricing for businesses.”

A policy rate cut would not only boost the confidence of local enterprises but also send a strong signal to international investors about the resilience of Ghana’s economy. Lower interest rates typically encourage capital expenditure, enhance profitability, and spur job creation across key sectors, including manufacturing, agriculture, and services.

While AGI’s expectations are grounded in improved economic indicators, the BoG’s final decision will depend on a broader assessment of inflation trends, fiscal discipline, and global economic conditions. The Central Bank may also consider external risks such as rising oil prices, geopolitical tensions, and the pace of monetary tightening in advanced economies before making its move.

Nonetheless, stakeholders across the business community will be watching today’s MPC announcement closely. A decision to lower the policy rate could mark a turning point in Ghana’s post-COVID economic recovery efforts and signal a new era of industrial support.