The Bank of Ghana's Monetary Policy Committee reduced its policy rate by 350 basis points to 18.00% at its November 2025 meeting, delivering one of the largest single cuts the country has seen in recent years. The decision, announced on 25 November, reflects an acceleration in Ghana's disinflation process that gave the MPC the confidence to move rates decisively lower rather than continuing with a more incremental easing approach.
The outsized reduction follows a period during which the central bank held rates at restrictive levels to bring inflation under control following the severe economic stress the country experienced in 2022 and 2023. The sharp shift in direction in November 2025 signals that policymakers are now sufficiently assured about the disinflation trajectory to pursue aggressive normalisation of the policy stance.
DISINFLATION PAVES THE WAY FOR AGGRESSIVE EASING
Ghana's inflation had climbed to historically elevated levels as the economy grappled with currency depreciation, high public debt costs, and commodity price shocks. The central bank responded with a series of rate increases that took the monetary policy rate to restrictive territory, and then maintained that stance for an extended period to anchor expectations and allow the disinflationary impulse to gain traction. The November MPC communiqué indicated that disinflation had accelerated sufficiently to justify the large cut.
A 350-basis-point reduction in a single meeting is notable by any international standard and signals a decisive shift in the MPC's assessment of the balance of risks. As inflation falls faster than nominal interest rates adjust, real policy rates can become more restrictive than intended. The MPC appears to have concluded that this dynamic made waiting for further incremental confirmation counterproductive, and that a large single move was preferable to a sequence of smaller steps that might have lagged behind the disinflation dynamics.
At 18.00%, the new rate still leaves real policy rates in clearly positive territory relative to reported inflation, which preserves monetary credibility and demonstrates that the MPC is not abandoning prudence in favour of aggressive stimulus. The bank retains significant room to adjust further if the disinflation trend continues without triggering concerns about an excessively loose policy stance.
OPEN MARKET OPERATIONS REVERT TO 14-DAY BILLS
Alongside the rate cut, the Bank of Ghana confirmed it would revert to using 14-day bills as the primary instrument for managing liquidity through open market operations. The move back to a shorter-tenor instrument is designed to improve the speed at which policy rate changes transmit to money market rates, as shorter maturities allow the banking system to reprice its funding more rapidly than would be possible with longer-dated instruments.
The combination of a large rate cut and a reconfiguration of open market operations instruments underscores the MPC's determination to ensure that the easing is transmitted promptly and effectively throughout the financial system. Commercial banks will need to adjust their deposit and lending rate pricing accordingly, and both corporate and retail borrowers across the economy may begin to see the benefit of lower rates in their loan repayments over the coming months as the transmission mechanism works its way through the banking system.