BoG drops policy rate to 14%
The policy decision-making body of the Bank of Ghana (BoG), the Monetary Policy Committee (MPC), has reduced its policy rate from 15.5 per cent to 14 per cent, the lowest since October 2021.
The reduction of 150 basis points in the rate at which the central banks lend to commercial banks is in line with the rate’s steady decline from 28 per cent in March 2025 as inflationary pressures ease further.
The policy rate went as high as 30 per cent in July 2023, staying for two quarters before easing to 29 per cent in January 2024.
The decision to reduce the rate, which is one of the policy tools of the banking and monetary sector regulator, for the fifth time since July 2025, is expected to lower lending rates of commercial banks and boost private sector credit.
With treasury instrument rates also crashing down to a record 4.65 per cent for the benchmark 91-day bill, analysts contend that commercial banks will be looking more to the private sector to lend.
The Governor of BoG, Dr Johnson Pandit Asiama, who announced the decision of the six-member committee at a press conference at the Bank Square in Accra yesterday, pointed to strong macroeconomic gains, including six per cent gross domestic product (GDP) growth in 2025 and 5.8 per cent growth in the last quarter of that year, inflation declining to its lowest of 3.3 per cent in February 2026, improved business and consumer confidence, and a more stable external sector supported by higher reserves and export earnings.
However, the Governor, who chairs the MPC, warned that rising oil prices and geopolitical tensions in the Middle East posed risks to the inflation outlook, and pledged to closely monitor developments ahead of its next meeting.
Global economic developments
In arriving at the decision, the committee reviewed recent global and domestic economic trends, with a focus on risks to inflation and growth.
"The committee observed global growth had remained resilient at the start of the year, supported by accommodative monetary policies in advanced economies, stronger consumer and business confidence, and increased investment spending, particularly in the technology sector," he said.
However, Dr Asiama said the committee observed that the global environment had since shifted significantly due to escalating tensions in the Middle East, which had disrupted supply chains and heightened uncertainty.
“Although global headline inflation has been declining, the recent surge in oil prices has renewed inflation concerns and may compel some central banks to reassess their monetary policy stance," he said.
He added that tightening global financing conditions could emerge in the near term, depending on the duration and intensity of the conflict.
Domestic economic performance
On the domestic front, Dr Asiama stated strong economic performance, with provisional data indicating that Ghana’s real GDP grew by six per cent in 2025, up from 5.8 per cent in 2024.
He said non-oil GDP growth also accelerated to 7.6 per cent, driven largely by the services and agriculture sectors, while high-frequency indicators pointed to sustained momentum in early 2026.
The Governor added that the real Composite Index of Economic Activity grew by 8.4 per cent in January 2026, supported by increased private sector credit, industrial production, trade activities and consumption by households and firms.
“Consumer and business confidence have improved significantly, reflecting easing inflationary pressures and optimism about future economic conditions,” he said.
Dr Asiama added that the broad-based recovery signalled strengthening macroeconomic stability.
The Governor said inflation continued its downward trend, declining to 3.3 per cent in February 2026 from 5.4 per cent in December 2025, driven by both food and non-food components.
He said core inflation, which excludes volatile variables, also eased, indicating subdued underlying price pressures.
At the same time, the committee observed that inflation expectations across households, businesses and the financial sector remained well anchored.
Another factor in the decision was a decline in interest rates of government treasury papers, with the 91-day Treasury bill and average bank lending rates falling sharply, contributing to a gradual increase in credit to the private sector.
“The strong disinflation process over the past year has been supported by tight monetary policy, exchange rate stability and improved food supply conditions," he said.
Dr Asiama added that the banking sector remained stable, despite risks from non-performing loans.
The external sector remained robust, Dr Asiama stated, with trade surplus improving to $3.7 billion in early 2026, driven by strong gold export earnings and moderated import growth.
"Gross international reserves rose to $14.8 billion, equivalent to 5.8 months of import cover, supporting relative stability of the cedi.
"The committee also pointed to ongoing efforts under the national reserve accumulation programme aimed at boosting reserves further in the medium term," he said.
Promoting local attire
All members of the MPC, alongside advisors and observers, were spotted at the 129th MPC press conference in colourful traditional smocks.
Dr Johnson Pandit Asiama underlined the importance of promoting local attire as part of broader economic alignment.
“We stand with efforts by government to promote our traditional wear, and we patronise these traditional products.
We see this just as we see the issue of dollarisation, because our consumption, investment and production preferences must align with national priorities,” he stated.
He added that such choices reflected a conscious shift towards supporting local industries, while reinforcing macroeconomic stability.
The MPC said it would continue to closely monitor developments, especially in the Middle East, and was ready to take appropriate policy actions to safeguard price stability at its next meeting scheduled for May 18 to 20, this year.
