The Bank of Ghana (BoG) has cut its key monetary policy rate by 350 basis points to 21.5%, citing sustained disinflation and strong economic performance. The decision, reached by majority vote at the conclusion of the central bank’s 126th Monetary Policy Committee (MPC) meeting, reflects growing confidence in Ghana’s economic trajectory.
Governor Dr. Johnson Pundit Asiama, announcing the rate cut, acknowledged potential inflationary risks from pending utility tariff reviews but said robust buffers and prudent policies would sustain the downward inflation trend.
“Headline inflation is expected to drop within the medium-term target band of 8 ± 2% by year-end,” Dr. Asiama said. “While the possible upward review of utility tariffs could exert price pressures, appropriate monetary policy, strong sterilisation, fiscal consolidation, and adequate reserve buffers will sustain the disinflation process.”
The Net Open Position Limits for banks have also been revised from ± 5 percent to between 0 percent and –10 percent, effective 1 October 2025.
Addressing recent concerns over marginal demand pressures on the Ghana cedi, the Governor reassured the public of its resilience.
“There is no reason to be anxious about the cedi. We will do everything in our power to ensure stability—no need to go into a frenzy.”
Macroeconomic Indicators Year to Date
The BoG’s latest financial and economic data paints a picture of robust performance:
- Inflation: Fell to 11.5% in August 2025, down from 12.1% in July—its lowest level in four years.
- Growth: Real GDP expanded 6.3% in Q2 2025 versus 5.7% in Q2 2024. Non-oil GDP grew even faster at 7.8%, compared with 5.7% a year earlier.
- Trade Balance: The external sector recorded a US$6.2 billion trade surplus for the first eight months of 2025, up sharply from US$2.1 billion in the same period of 2024, driven by strong gold and cocoa exports.
- Reserves: Gross International Reserves stood at US$10.7 billion (4.5 months of import cover) as of August 2025, up from US$8.98 billion at end-December 2024.
The central bank projects that the external sector will remain resilient, supported by favourable commodity prices and stronger remittance inflows.
The MPC said it will closely monitor macroeconomic developments and make further adjustments if needed to reinforce disinflation and growth momentum.
The next MPC meeting is scheduled for November 17–19, 2025, after which the BoG will announce its next policy decision.
Source: Starrfm.com.gh
