The Bank of Ghana's Monetary Policy Committee cut the country's benchmark monetary policy rate by 350 basis points to 21.50% at its September 2025 meeting, extending an aggressive easing cycle that has taken the rate from 28.00% across just two meetings — a cumulative reduction of 650 basis points. The committee signalled confidence that inflation was converging towards its 8% ±2% target band by the end of 2025, providing the justification for an accelerated pace of cuts.
The depth and speed of the Bank of Ghana's easing cycle reflects the severity of the tightening that preceded it. Ghana's monetary policy rate was raised sharply during the 2022–2024 period as the country navigated a currency crisis, a sovereign debt restructuring, and inflation that at its peak rose well above 50%. The return of macroeconomic stability — anchored by the IMF-supported fiscal adjustment programme and a successful domestic debt exchange — has allowed the central bank to pivot decisively towards supporting economic recovery.
INFLATION CONVERGING TOWARDS TARGET
The committee's confidence in the disinflation trajectory is the central driver of the rate cuts. Ghanaian headline inflation has declined substantially from its peak, and the Bank of Ghana's projections indicate that the convergence towards the 8% ±2% target band is on course for the fourth quarter of 2025. Meeting that target would represent a remarkable turnaround for an economy that was experiencing inflation more than six times that rate only a few years ago.
The Bank of Ghana has attributed the disinflation to a combination of tight monetary conditions maintained through 2023 and 2024, exchange rate stabilisation following the cedi's sharp depreciation, and the dampening effect of fiscal consolidation on domestic demand. Food price inflation, which accounts for a significant portion of the consumer price basket in Ghana, has also eased as supply conditions improved and the exchange rate pass-through diminished.
The pace of 350 basis points in a single meeting is larger than many central banks in sub-Saharan Africa have deployed in recent easing cycles, reflecting the BoG's assessment that the inflation outlook is sufficiently benign to support decisive action rather than cautious, incremental reductions. The committee noted in its statement that monetary conditions, even at 21.50%, remain restrictive relative to its inflation outlook, providing room for further easing if the convergence trend holds.
RECOVERY PROSPECTS AND MARKET REACTION
The reduction to 21.50% will flow through to commercial bank lending rates over the coming weeks, lowering borrowing costs for businesses and households across Ghana. Credit growth has been muted throughout the tightening cycle as high interest rates made new borrowing prohibitively expensive for many borrowers, and the easing of monetary conditions is expected to support a gradual recovery in private sector credit and investment activity.
Ghana's banking sector, which absorbed significant losses during the domestic debt exchange, is rebuilding its capital and profitability. Lower policy rates reduce the margin pressure on banks that have been funding themselves at elevated rates, and the improved macroeconomic environment strengthens the outlook for loan quality. The combination of recapitalisation efforts and falling rates sets a more constructive backdrop for banking sector recovery.
The cedi has shown relative stability in recent months compared with the volatility of the crisis period, and the Bank of Ghana will be attentive to any exchange rate response to the rate cuts that could reignite imported inflation. The committee retains the flexibility to adjust the pace of further easing if external or domestic conditions change materially, but its current stance suggests that policymakers believe the balance of risks now favours supporting growth over maintaining the elevated rates that were necessary during the stabilisation phase.