Bank of Ghana Slashes Policy Rate to 25% Following Continued Decline in Inflation.

Bank of Ghana Slashes Policy Rate to 25% Following Continued Decline in Inflation

The Bank of Ghana has reduced its Monetary Policy Rate by 300 basis points, moving from 28% to 25%, its most significant rate cut in recent years. 

The decision, announced by Governor Dr. Johnson Asiama during the 125th Monetary Policy Committee (MPC) meeting held on July 30, 2025, reflects growing confidence in the country’s macroeconomic outlook.

According to Dr. Asiama, the MPC reached the decision by majority vote, citing sustained disinflation and a relatively stable cedi as key factors. He added that the Committee would continue to monitor developments and consider further reductions should the current disinflation trend persist.

Inflation dropped sharply to 13.7% in July, down from previous highs, showing the effectiveness of both monetary and fiscal interventions aimed at price stability. This drop, coupled with improved fiscal discipline and a calm foreign exchange market, has created favorable conditions for easing monetary policy.

While this move is expected to lower the cost of credit for businesses and households, the real impact depends on whether commercial banks respond by adjusting their lending rates downward. Analysts believe the cut could trigger increased private sector investment and help consolidate Ghana’s ongoing economic recovery.

The Governor, however, cautioned that despite the positive trends, there remain underlying risks that the central bank is watching closely. Any future adjustments to the policy rate, he said, will depend on a continued decline in inflation and the overall economic environment.

Indicator Status
•New Policy Rate 25%
•Previous Rate 28%
•Rate Change –300 basis points
•Current Inflation (July) 13.7%
•MPC Meeting 125th

The central bank’s decisive action signals a possible shift into a more accommodative phase of monetary policy. Its success, however, hinges on effective transmission through the financial sector and the maintenance of macroeconomic discipline.



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