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Three out of the six members of the Bank of Ghana’s Monetary Policy Committee (MPC) voted in favour of a 350-basis-point reduction in the policy rate to 18 percent during the Committee’s final meeting of the year.
Minutes from the meeting revealed the main economic indicators that guided their stance.
Members highlighted the sharp drop in inflation—from 23.8 percent in December 2024 to 8 percent by October 2025—as the strongest justification for loosening monetary policy. They noted that the disinflation trend spans both food and non-food categories, core inflation has fallen substantially, and inflation expectations among businesses and households have moderated.
Projections indicate inflation could decline further to between 5 and 6 percent by year-end, placing it well within the Bank of Ghana’s medium-term target range.
Another major factor was the significant appreciation of the Ghana cedi, which has strengthened by 32.2 percent against the US dollar since the start of the year. This, they said, has helped curb imported inflation, stabilise market expectations, and lower exchange-rate risks.
The country’s external sector performance also bolstered their case. A current account surplus, strong gold and cocoa export earnings, rising foreign reserves of US$11.4 billion (equivalent to 4.8 months of import cover), and a balance of payments surplus of US$1.8 billion all demonstrate improved resilience against external pressures.
On the domestic front, the economy is picking up momentum: GDP grew 6.3 percent in the second quarter, the Composite Index of Economic Activity rose 9.6 percent in September, and business and consumer confidence surveys continue to show optimism.
The members additionally cited elevated real interest rates—currently around 13–14 percent—which they argue suppress borrowing and constrain private-sector expansion.
They believe a 350-basis-point cut would better reflect Ghana’s current macroeconomic conditions and help stimulate credit growth.
The vote reflects a more growth-supportive tilt within the MPC while maintaining the priority of price stability.
Source: citinews
