The Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) has reduced the policy rate by 150 basis points to 14 per cent, citing favorable domestic macroeconomic conditions and historically low inflation, despite rising geopolitical tensions in the Middle East.
Dr Johnson Pandit Asiama, the Governor of the Central Bank, announced the decision at the 129th MPC briefing, in Accra on Wednesday, allaying fears of the cut from the previous 15.5 to 14 per cent impacting the country’s disinflation process.
The 14 per cent policy rate is the lowest the country has recorded since July 2021, when it had a rate of 13.5 per cent, before successive increases, peaking at 30 per cent in September 2023 with fluctuations years after.
At the 129th MPC press briefing, Dr Aisama said the rate cut reflected the MPC’s assessment that prevailing real interest rates provided scope for monetary policy accommodation without compromising the Central Bank’s price stability mandate.
He noted sustained recovery across multiple economic indicators, with headline inflation declining to 3.3 per cent in February 2026, well below the medium-term target band of six to 10 per cent.
He admitted that the rising geopolitical tensions in the Middle East have deepened uncertainty in the external sector, but the continued domestic economy improvements, even in the first two months of 2026 were positive.
“The bank’s latest forecast suggested that headline inflation will remain within the medium-term target. Downside risks to the inflation outlook includes the likely pass through of higher crude oil prices and escalating geopolitical tension,” he stated.
“Despite these upside risks to the inflation profile, the favourable domestic macroeconomic conditions and the high prevailing real interest rates, provide scope to ease the policy rate further.”
“Consequently, the MPC decided to reduce the manager policy rate by 150 basis points to 14 per cent.”
The decision comes as Ghana’s economic performance has exceeded expectations across virtually all key indicators, as composite index of economic activity recorded an annual growth of 8.4 per cent in January 2026, compared to six per cent in 2025.
He referenced provisional data for January to December 2025, which showed overall fiscal deficit on commitment basis of one per cent of GDP, well below the budget target of 2.8 per cent.
Primary balance also recorded a surplus of 2.6 per cent of GDP, exceeding the target of 1.5 per cent, reflecting constrained government spending due to commitment control measures despite revenue shortfalls.
He noted that public debt stock declined to 45.3 per cent of GDP at the end of December 2025, down from 61.8 per cent at the end of December 2024, attributed to the combined effects of fiscal consolidation, debt restructuring, and nominal GDP growth.
The banking sector assets grew, driven by investments, which rose by 57.5 per cent compared to 8.6 per cent growth in February 2025, with financial soundness indicators in terms of profitability, liquidity, solvency, asset quality, and efficiency all improving over the period.
The Central Bank Governor said the development demonstrated increased credit to the private sector, rising industrial production, expanding international trade activities, and growing household consumption.
Non-performing loans (NPLs) ratio declined to 18.7 per cent in February 2026 from 22.6 percent a year earlier, driven by pickup in bank credit and contraction in the NPL stock.
Trade surplus improved to US$3.7 billion in the first two months of 2026, compared with $2.1bn in the same period in 2025, while gross international reserves increased to US$14.8bn – equivalent to 5.8 months of import cover as at end February 2026.
On the back of these occurrences, the Governor said the cut in the policy rate was expected to further reduce borrowing costs for businesses and households, potentially accelerating private sector credit growth and supporting continued economic expansion.
However, he cautioned that rising geopolitical tensions in the Middle East had deepened uncertainty in the external environment, indicating their readiness to take appropriate policy actions needed to safeguard price stability.
GNA
