Ghana’s inflation fall has been uninterrupted for eleven months, beating all expectations and renewing the economy’s outlook and integrity.
This has generated renewed confidence in the Ghanaian economy and its managers, once again, proving that the strategy and initiatives of the government and the Bank of Ghana are not just working but are effective for drastic reforms.
The further cut in the inflation rate from 8 percent in October to 6.3 percent in November has caused a lot of shakeups in conversations on what the economic managers are doing right and the IMF’s role in the progress made so far.
The inflation rate in November shows that the general prices of goods increased more slowly than they did in October.
“Year-on-year inflation for November 2025 stands at 6.3 percent. This simply means that, on average, the prices of goods and services today are 6.3 percent higher than they were in November last year. Month-on-month inflation is 0.9 percent, which tells us how much prices changed between October and November this year.”
Dr. Alhassan Iddrisu, Government Statistician
November Inflation Rate Beats IMF Target
The IMF projected Ghana’s inflation by 2025-year end to settle at 8 percent. Projections explore hypothetical “what-if” scenarios that are made based on a combination of historical data analysis, specific assumptions about future events, and various modeling techniques to estimate potential future outcomes.
The historical data of Ghana in the past three years (since 2022) leaves much to be desired. The shocks and unforeseen mismanagement of the economy in the past reflected the IMF’s projection for the 2025 year-end.
The IMF earlier in 2024 projected a single-digit inflation of 8 percent for the 2025 end-of-year, which aligned with the government’s target for the same period. The government’s target, on the other hand, projected inflation to ease from 23 percent to 15 percent and then decline significantly to a single digit for 2024 and 2025, respectively.
Since 2021, when Ghana recorded a series of single-digit year-on-year inflation rates, inflation steeply declined, reaching a 22-year record high inflation of 54.1 percent in December 2022, despite the government’s target of 8 percent ± 2 percent and the IMF’s projection of 16.3 percent.
Experts argue that Ghana’s past macroeconomic data, combined with assumptions and near-term future events, can provide projections, but they are limited by the government’s economic behavior and management.
Meanwhile, many analysts give credit to the current managers of the economy (the Ministry of Finance, representing the government, and the Bank of Ghana) for their steadiness and discipline. Some economists declare that Ghana can prudently manage its own economy and therefore, subsequent governments should desist from applying for IMF support in the future.
November’s Cut to Further Drop Benchmark Interest Rate
Economists earlier estimated that the November inflation rate would drop to 6.4 percent. However, the drop beyond expectations has increased the difference between the actual inflation rate and the Central Bank’s target rate.
The benchmark interest rate set by the Bank of Ghana serves as the basis for other interest rates and is used to guide monetary policy, with changes impacting inflation, economic growth, and borrowing costs. The recent benchmark interest rate in Ghana was cut by 350 basis points to 18% due to falling inflation. The fall in interest rate below the Bank’s target is likely to reduce the benchmark interest rate further.
An inflation rate below the Bank of Ghana’s target can cause borrowing costs to increase if the Central Bank increases interest rates. This can happen in cases where increasing the interest rate is needed to combat other economic issues, such as exchange rate volatility.
A typical lower inflation is associated with lower borrowing costs. However, the Central Bank could increase its benchmark interest rate in response to factors like a depreciating currency, which makes imports more expensive and can lead to future inflation, or high non-performing loans in the banking sector, both of which can put upward pressure on commercial bank lending rates.
Nevertheless, the state of the Ghanaian economy today has the Cedi fairly stable, with non-performing loans declining. Therefore, the inflation rate below the Bank of Ghana target rather boosts further investor expectations that the Bank of Ghana will continue to ease its monetary policy by cutting interest rates further in the near future. The 6.3 percent inflation rate can lead to higher net interest income, the main source of revenue for many banks.
The next Monetary Policy Committee (MPC) meeting is scheduled for January 26-28, 2026. The meeting will conclude on January 28, 2026, with the announcement of the policy decision.
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