Ghana’s central bank is considering another interest rate reduction following a sharper-than-expected fall in inflation, a development that has pushed real borrowing costs higher and risks slowing the country’s economic recovery. Governor Johnson Asiama said on Monday that the Bank of Ghana now has room for “gradual easing,” although he stressed that any adjustment must be carefully managed to preserve policy credibility and safeguard recent progress in bringing prices down.
The comments were delivered during the Monetary Policy Committee’s review session, ahead of its next interest rate announcement on Wednesday. The bank has already eased policy at its last two meetings, including a historic 350-basis-point cut in September that brought the benchmark rate to 21.5 percent. That decision followed a sustained retreat in inflation from the crisis-era highs triggered by the country’s debt difficulties, currency instability and global commodity price shocks.
Asiama said the rapid cooling in inflation has had the effect of lifting real interest rates, making borrowing more expensive in real terms even as nominal rates fall. This, he warned, could undermine private sector confidence and weigh on investment at a time when Ghana is attempting to shift from post-crisis stabilisation to stronger and more broad-based growth.
The central bank expects inflation to drop to between 4 and 6 percent by the end of 2025, before settling within the medium-term target band of 8 percent, plus or minus two percentage points, in 2026. The disinflation trend has been supported by tighter monetary policy earlier in the year, improved food supplies, a calmer foreign exchange market and the government’s ongoing fiscal consolidation under the International Monetary Fund-supported programme.
Asiama said Ghana’s economic trajectory is gradually turning from recovery to expansion. He pointed to growth of 6.3 percent in the first half of 2025, a level that outperformed earlier forecasts and reflected stronger activity in services, industry and agriculture. He also noted that gross international reserves had climbed to 11.41 billion dollars, equivalent to more than five months of import cover, helping to stabilise the cedi and improving foreign investor sentiment.
Even with these gains, Asiama said the central bank must balance the need to support growth with the imperative of consolidating its inflation-fighting credentials. He cautioned that premature or overly aggressive easing could reignite price pressures, weaken the currency and undermine the progress made during the most turbulent phase of the crisis.
The bank’s upcoming rate decision will be closely watched by investors, lenders and businesses. A further cut would signal confidence in the durability of Ghana’s disinflation process and could reduce financing costs for firms and households. However, analysts warn that global financial conditions remain uncertain and that Ghana must remain alert to potential external shocks, including movements in international interest rates and commodity prices.
As the Monetary Policy Committee prepares to finalise its decision, the central bank appears intent on navigating a narrow path: easing policy to support economic momentum while ensuring that inflation continues its steady return to target. The outcome on Wednesday will offer the clearest indication yet of how the bank intends to manage that balance in the months ahead.
