Ghana’s central bank has taken another decisive step in its monetary easing cycle, cutting the Monetary Policy Rate by 250 basis points to 15.50 percent.
The decision was reached at the end of the 128th Monetary Policy Committee meeting held from January 26 to 28, 2026, reflecting growing confidence in the country’s macroeconomic recovery and sustained disinflation.
The policy move signals a gradual shift from crisis containment toward supporting growth, credit expansion, and job creation, after a prolonged period of tight monetary conditions.
Improved Global Conditions Support Policy Shift
The Bank of Ghana noted that the global economic environment has become more supportive. Despite lingering geopolitical risks, the world economy proved more resilient than expected in 2025, aided by fiscal stimulus in some economies, easing inflation pressures, rising real wages, and increased investments in artificial intelligence, particularly in the United States and Asia.
The International Monetary Fund projects global growth to remain steady at 3.3 percent in 2026. Global headline inflation has also continued to moderate, driven by lower oil and food prices and anchored inflation expectations. These trends have eased global financing conditions and reduced pressure on emerging market currencies, creating favorable spillovers for Ghana’s domestic economy.
Stronger Domestic Growth Momentum
On the domestic front, economic activity gained notable momentum in 2025. Provisional data from the Ghana Statistical Service showed that real GDP expanded by 6.1 percent in the first three quarters of the year, up from 5.8 percent over the same period in 2024. Non oil GDP growth was even stronger at 7.5 percent, underscoring the broad based nature of the recovery.
Growth was largely driven by the services and agriculture sectors, while the Bank’s Composite Index of Economic Activity recorded a sharp improvement. The index grew by 8.8 percent in November 2025 compared to just 1.5 percent in November 2024, supported by increased international trade, higher industrial production, improved consumption, and rising private sector credit.
Consumer and business confidence surveys also pointed to improved sentiment, with respondents citing easing inflation, currency stability, and expectations of lower borrowing costs.
Inflation Falls Faster Than Expected
The most compelling justification for the rate cut came from Ghana’s rapid disinflation. Headline inflation declined sharply from 23.8 percent in December 2024 to 5.4 percent in December 2025. The decline was broad based and supported by tight monetary policy, fiscal consolidation, and sustained appreciation of the cedi.
Core inflation, which excludes energy and utility prices, also eased, confirming muted underlying price pressures. Inflation expectations among consumers, businesses, and the financial sector remained well anchored, reinforcing the MPC’s confidence that price stability has largely been restored.
Financial Conditions Ease, Credit Rebounds
Tight monetary conditions in 2025 led to a significant slowdown in monetary aggregate growth. Reserve money expanded by 12.5 percent, far below the 47.8 percent recorded in 2024, largely due to aggressive liquidity sterilisation. Broad money growth also declined sharply.
Money market rates followed the disinflation trend. The 91 day Treasury bill rate fell to 11.08 percent in December 2025 from 27.73 percent a year earlier. Previous policy rate cuts totaling 900 basis points in 2025 reduced average lending rates to 20.45 percent from 30.25 percent, supporting a rebound in real private sector credit growth to 13.1 percent.
The MPC expects the latest policy rate cut to further improve credit conditions and strengthen financial intermediation, particularly for businesses seeking expansion capital.
Fiscal and Banking Sector Stability Strengthens Confidence
Fiscal performance remained strong through November 2025. The overall fiscal deficit on a commitment basis narrowed to 0.5 percent of GDP, significantly outperforming the 3.5 percent target. 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 banking sector also posted solid gains. Total assets increased, driven by growth in deposits, borrowings, and shareholders’ funds. Financial soundness indicators showed that the sector remained solvent, profitable, and efficient. Although the non performing loan ratio improved to 18.9 percent, it remained elevated, prompting ongoing efforts to resolve legacy loans and strengthen credit underwriting.
Ghana’s external position strengthened considerably in 2025. The country recorded a provisional current account surplus of US$9.1 billion, supported by strong gold exports, higher private transfers, and moderated service and income payments. Gross international reserves rose to US$13.8 billion, providing 5.7 months of import cover.
These buffers supported a strong performance of the cedi, which appreciated by 40.7 percent against the US dollar in 2025 and has remained relatively stable in early 2026.
Outlook and Policy Direction
The MPC acknowledged that macroeconomic stability has largely been achieved, allowing policy to gradually pivot toward supporting real sector recovery. While risks remain from utility price adjustments and global commodity volatility, inflation is expected to stay within the medium term target.
By lowering the policy rate to 15.50 percent, the Bank of Ghana signaled its commitment to consolidating stability while laying the foundation for sustainable growth. The Committee pledged to remain vigilant and ready to act should emerging risks threaten the gains made so far.
