The Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) has, by a majority decision, reduced the monetary policy rate by 250 basis points to 15.5 per cent from 18 per cent, citing strong macroeconomic stability and a favourable domestic and external environment.
The latest cut brings the policy rate to its lowest level in four years, since January 2022.
Addressing a news conference after the 128th regular meeting of the MPC, the Governor of the Bank of Ghana, Dr Johnson Pandit Asiama, said the decision was driven by improving macroeconomic fundamentals and sustained stability across key sectors of the economy.
He explained that the reduction was also intended to ease the cost of credit, stimulate private sector activity and support economic growth.
“With stability largely achieved, the focus of policy is gradually shifting towards consolidating these gains and supporting stronger real sector recovery, job creation and improved financial intermediation,” Dr Asiama stated.
On the domestic front, the Governor noted that economic growth had gathered momentum. Provisional data from the Ghana Statistical Service showed that overall Gross Domestic Product expanded by 6.1 per cent in the first three quarters of 2025, compared with 5.8 per cent over the same period in 2024.
Non-oil GDP growth accelerated to 7.5 per cent, driven mainly by the services and agriculture sectors.
“The Bank’s Composite Index of Economic Activity rose sharply, recording 8.8 per cent growth in November 2025, up from 1.5 per cent a year earlier,” he said.
Dr Asiama attributed the improved performance to stronger international trade, increased private sector credit, higher industrial output and improved consumption.
He added that consumer and business confidence surveys pointed to improved sentiment, supported by easing inflation, currency stability and expectations of lower borrowing costs.
Headline inflation declined sharply from 23.8 per cent in December 2024 to 5.4 per cent in December 2025, reflecting tight monetary policy, fiscal consolidation and currency appreciation. Inflation expectations, he said, remained well anchored, while growth in monetary aggregates moderated significantly.
On fiscal performance, Dr Asiama said the overall fiscal deficit narrowed to 0.5 per cent of GDP by November 2025, well below the target.
“Public debt declined sharply to 45.5 per cent of GDP from 63.1 per cent a year earlier,” he noted.
The Governor said the external sector also recorded strong performance, with gross international reserves rising to $13.8 billion, equivalent to 5.7 months of import cover.
This, he explained, strengthened the cedi, which appreciated significantly against major trading currencies in 2025 and remained stable in early 2026.
Dr Asiama assured that the MPC would continue to monitor risks closely to ensure macroeconomic gains translated into sustainable and inclusive growth.
On the global front, he noted that the international economic environment remained broadly supportive, underpinned by fiscal stimulus in some economies, rising real wages amid easing inflation, and increased investment in artificial intelligence, particularly in the United States and Asia.
Against this backdrop, the International Monetary Fund projects global growth to remain steady at 3.3 per cent in 2026.
Global inflation, he added, continued to moderate towards central bank targets, supported by declining oil and food prices, easing underlying inflation and anchored inflation expectations, improving global financing conditions for both advanced and emerging market economies.
BY KINGSLEY ASARE
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