The Monetary Policy Committee (MPC) of the Bank of Ghana has reduced the Monetary Policy Rate (MPR) by 250 basis points to 15.50 per cent, citing stronger macroeconomic stability, sharply declining inflation, and improved growth prospects.
Dr Johnson Asiama announced the decision at the conclusion of the Committee’s 128th regular meeting, held from January 26–28, 2026, to review recent economic developments and assess risks to the outlook.
According to the Committee, the policy environment has strengthened markedly on the back of tight monetary policy implementation, fiscal consolidation, and a significant build‑up of international reserves.
Global developments
The MPC noted that the global economy remained resilient in 2025, supported by fiscal stimulus measures, rising real wages, and growing investment in Artificial Intelligence technologies across major advanced and emerging economies. Global growth for 2026 is projected by the IMF at 3.3 percent.
Inflation trends abroad have continued to ease, driven by falling oil and food prices and anchored expectations.
These developments, alongside expectations of monetary easing by major central banks, have helped to relax global financing conditions—an outlook considered favourable for Ghana.
Domestic growth strengthens
New data from the Ghana Statistical Service shows a broad recovery in the real sector. Real GDP grew 6.1 per cent during the first three quarters of 2025, compared with 5.8 per cent in the same period of 2024. Non‑oil GDP expanded by 7.5 per cent, driven mainly by gains in the services and agriculture sectors.
The Bank’s Composite Index of Economic Activity (CIEA) grew by 8.8 per cent in November 2025, up sharply from 1.5 per cent a year earlier. Improvements in international trade flows, private‑sector credit, industrial production, and consumer demand supported the index. Business and consumer confidence surveys showed further positive sentiment across the economy.
Inflation declines sharply
Headline inflation fell significantly to 5.4 per cent in December 2025, from 23.8 per cent in December 2024. The Bank attributed this decline to the tight policy stance, fiscal consolidation, and a stronger cedi. Core inflation—excluding energy and utilities—also eased, an indication of muted underlying price pressures.
Monetary and fiscal conditions
Growth in monetary aggregates moderated in 2025, with reserve money rising by 12.5 per cent, down from 47.8 per cent the previous year, due to aggressive sterilisation measures. Broad money growth slowed to 16.5 per cent.
Interest rates fell considerably. The 91‑day Treasury bill rate declined to 11.08 per cent in December 2025 from 27.73 per cent a year earlier. Average lending rates dropped to 20.45 per cent, supporting a rebound in real private‑sector credit to 13.1 percent.
Fiscal performance reflected strong consolidation efforts. The overall deficit to November 2025 stood at 0.5 per cent of GDP, well below the 3.5 per cent target. The primary balance recorded a surplus of 2.8 per cent, while public debt declined to 45.5 per cent of GDP, from 63.1 percent in 2024.
Banking sector remains robust
The banking industry recorded solid performance in 2025, driven by stronger deposit growth, increased borrowings, and improved capital positions. The Non‑Performing Loans (NPL) ratio improved to 18.9 per cent, although still elevated. Bank of Ghana said ongoing reforms aimed at resolving legacy asset quality issues are expected to strengthen the sector further.
External sector improves; cedi strengthens
The external sector recorded a provisional current account surplus of US$9.1 billion, aided by strong gold exports and increased private transfers. Gross International Reserves rose to US$13.8 billion—equivalent to 5.7 months of import cover—up from US$9.1 billion in 2024.
Supported by these inflows and prudent policy, the cedi appreciated by 40.7 per cent against the US dollar in 2025, reversing the 19.2 per cent depreciation recorded in 2024.
Outlook and decision
The Committee noted that the medium‑term inflation outlook remains favourable, although risks from potential utility price adjustments and global commodity volatility remain.
GDP growth is also expected to remain strong, with a narrowing output gap potentially creating mild demand pressures.
However, the MPC said current monetary conditions remain tight relative to inflation trends, providing scope to support economic recovery.
By a majority decision, the Committee reduced the Monetary Policy Rate by 250 basis points to 15.50 percent.
Source: businesspostonline
