The Bank of Ghana’s Monetary Policy Committee (MPC) could cut the policy rate by 150 basis points to 12.5 percent at its September 2026 meeting, Databank Research has projected.
The investment research firm said the expected reduction would be consistent with the continued correction in inflation towards the Bank of Ghana’s medium-term target band of 8 percent ±2 percent.
“Despite external shocks, monetary policy in 1H’26 remained on a cautious easing path, with our expectation of two rate cuts for the year still intact following the first reduction in March 2026, which lowered the policy rate to 14.0 percent,” Databank Research said.
The projection comes after the MPC maintained the policy rate at 14 percent in July 2026, following its earlier reduction in March.
Databank said the monetary policy environment remained supportive of economic activity, although inflationary pressures had resurfaced during the first half of the year.
Inflation accelerated to 5.3 percent in June 2026, from 3.8 percent in January, driven largely by renewed price pressures from energy and imported inputs.
However, the research firm noted that monthly inflation remained relatively contained, suggesting that the underlying disinflation process had not been completely derailed.
Credit transmission strengthens
According to Databank, easier financial conditions have also improved the transmission of monetary policy to the economy, particularly through private-sector credit.
Private-sector credit growth increased by 41.2 percent year-on-year in nominal terms and 34.1 percent in real terms, indicating stronger lending activity despite the prevailing economic uncertainties.
The banking sector also maintained strong capital buffers, with the industry-wide Capital Adequacy Ratio (CAR) at 20.4 percent.
At the same time, asset quality continued to improve, with the banking industry’s gross non-performing loan (NPL) ratio declining to 16.1 percent.
Databank said the combination of stronger credit growth, adequate bank capital and improving asset quality provides room for further monetary easing.
“These underscore solid capital buffers and gradually improving asset quality,” the research firm said.
External risks remain
The outlook for further rate cuts, however, remains subject to developments in the global and domestic economy.
At its July meeting, the MPC maintained the policy rate at 14 percent amid concerns over rising global prices, transport costs and renewed conflict in the Middle East.
The Committee noted that external shocks could create renewed inflationary pressures, particularly through energy and imported goods.
Databank’s September projection therefore suggests that the MPC could resume its easing cycle if the disinflation trend remains broadly intact and external risks do not generate a significant deterioration in price stability.
A 150-basis-point reduction would take the policy rate to 12.5 percent, further lowering the cost of borrowing and potentially strengthening credit transmission to businesses and households.
The move would also mark another significant step in the central bank’s gradual shift towards a less restrictive monetary policy stance, following the first rate cut in March.
However, the balance between supporting economic growth and containing renewed inflationary pressures is expected to remain central to the MPC’s September decision.
Source: businesspostonline
