The Bank of Ghana (BoG) has reduced the Monetary Policy Rate by 250 basis points to 15.5 per cent, citing a faster-than-anticipated disinflation process, strengthened economic growth, improved fiscal discipline, and a significant build-up of external buffers that have restored macroeconomic stability.
The decision was taken by a majority vote of the Monetary Policy Committee (MPC) at the end of its 128th meeting on Wednesday, January 28, 2026 marking one of the most decisive policy adjustments since Ghana emerged from the depths of its recent economic crisis.
The Committee stressed, however, that the move does not signal a shift to loose monetary policy, insisting that monetary conditions remain tight and will continue to be actively managed to preserve price stability.
“Macroeconomic conditions have improved significantly. Inflation has declined faster than anticipated, expectations remain well anchored, and growth has strengthened,” Governor of the Bank of Ghana, Dr. Johnson Pandit Asiama, told journalists at a press briefing, following the MPC meeting.
He explained that with stability largely achieved, the focus of policy is gradually shifting from crisis containment to consolidating the gains and supporting stronger real sector recovery, job creation, and improved financial intermediation, while remaining alert to downside risks.
Global backdrop supportive
The MPC’s decision was taken against a backdrop of relatively favourable global developments. According to the Governor, global growth is expected to remain steady, with the International Monetary Fund (IMF) projecting growth of 3.3 per cent in 2026, driven largely by artificial intelligence-related investments, particularly in the United States and Asia.
Global headline inflation has continued to ease towards central bank targets, supported by lower oil prices, softer food inflation, declining underlying inflationary pressures and easing financial conditions.
These developments have led to improved risk appetite, expectations of policy easing by major central banks and depreciation of the US dollar, conditions which the MPC believes are broadly supportive of Ghana’s external position.
Dr. Asiama said these global dynamics have helped reinforce domestic recovery efforts and reduced external vulnerabilities that previously constrained policy flexibility.
Growth recovery gains momentum
On the domestic front, economic growth has strengthened markedly. Provisional data from the Ghana Statistical Service show that overall real GDP expanded by 6.1 per cent during the first three quarters of 2025, compared with 5.8 per cent over the same period in 2024.
Growth was even stronger in the non-oil economy, with non-oil GDP expanding by 7.5 per cent, up from 5.8 per cent previously.
The expansion was driven mainly by the services and agriculture sectors, reflecting improved confidence, stronger consumption and better harvests.
The Bank’s Composite Index of Economic Activity (CIA) also pointed to sustained momentum. The index recorded 8.8 per cent growth in November 2025, compared with just 1.5 per cent in November 2024, reflecting improvements in industrial production, international trade, private sector credit and consumption.
Consumer and business confidence surveys further confirmed the recovery, with respondents citing declining inflation, a more stable currency, lower perceived corruption costs and improved short-term business prospects as reasons for growing optimism.
Inflation collapses faster than forecast
Inflation developments were central to the MPC’s deliberations. Headline inflation declined sharply from 23.8 per cent in December 2024 to 5.4 per cent in December 2025, falling below the central bank’s medium-term target band of 8±2 per cent.
The Governor described the disinflation process as broad-based, supported by tight monetary policy, fiscal consolidation and significant appreciation of the cedi.
Inflation expectations across households, businesses and the financial sector have remained well anchored, while the Bank’s core inflation measure which excludes energy and utility prices also eased, signalling reduced underlying inflationary pressures.
During the question-and-answer session, Dr. Johnson Asiama dismissed suggestions that the rate cut could reignite inflation, stressing that easing over the past year had been carefully calibrated.
“Throughout last year we were easing, but we were sterilising at the same time,” he said, adding that the Bank had not compromised its disinflation gains despite lower policy rates.
Liquidity remains tightly managed
Data presented to the MPC showed that growth in monetary aggregates remained moderate. Reserve money grew by 12.5 per cent in 2025, significantly lower than the 47.8 per cent recorded in 2024, largely due to intensified sterilisation operations.
Broad money supply growth also slowed sharply to 16.5 per cent, from 31.9 per cent a year earlier.
Money market rates declined in response to policy easing. The 91-day Treasury bill rate fell to 11.08 per cent in December 2025, from 27.73 per cent a year earlier.
Average lending rates declined to 20.5 per cent, down from 30.25 per cent, supporting a rebound in private sector credit.
Private sector credit growth rose to 13.1 per cent in 2025, from just 2.0 per cent in 2024. Dr. Asiama described the shift as encouraging, noting during the Q&A session that banks were increasingly reallocating credit away from government and towards businesses.
“That is real financial integration,” he said, adding that some banks had begun calling customers to apply for loans at rates as low as 15 per cent, compared with over 30 per cent a year earlier.
Fiscal discipline anchors policy
The MPC also pointed to continued fiscal consolidation as a key factor underpinning the rate cut. Provisional fiscal data up to November 2025 showed that the overall fiscal deficit on a commitment basis stood at 0.5 per cent of GDP, well below the target of 3.5 per cent.
The primary balance recorded a surplus of 2.8 per cent of GDP, compared with a target of 0.6 per cent, while public debt declined sharply to 45.5 per cent of GDP, from 63.1 per cent a year earlier.
According to the Governor, disciplined fiscal policy has reduced pressure on monetary policy and strengthened coordination between the central bank and the Ministry of Finance.
External sector surges, cedi stabilises
The external sector recorded a robust performance in 2025. Ghana ended the year with a provisional current account surplus of US$9.1 billion, up from US$1.5 billion in 2024, driven by strong gold export earnings, increased private transfers and moderation in services and income payments.
These developments, together with high capital inflows, resulted in a provisional balance of payments surplus of US$3.98 billion. Gross international reserves rose to US$13.8 billion, equivalent to 5.7 months of import cover, compared with US$9.1 billion or 4.1 months of cover at the end of 2024.
Improved reserve accumulation strengthened confidence in the cedi. The currency appreciated by 40.7 per cent against the US dollar in 2025, reversing a 19.2 per cent depreciation in 2024 and has remained relatively stable in the early weeks of 2026.
Responding to concerns about a marginal depreciation in January, Dr. Asiama explained that Ghana operates a managed floating exchange rate regime.
“Don’t get worried if the cedi moves a little bit. It is normal,” he said, attributing recent movements to short-term factors such as uncertainty and speculative behaviour rather than structural weaknesses.
FX policy and gold strategy defended
During the Q&A, the Governor also addressed calls for the Bank to administratively prioritise foreign exchange for intermediate and capital goods imports.
While agreeing that Ghana should reduce consumption-driven imports, he insisted that FX allocation would remain market-based, noting that balance of payments data already showed stronger imports of intermediate goods relative to consumer goods.
Questions were also raised about the decline in Ghana’s gold holdings to 18.6 tonnes. Dr. Johnson Asiama clarified that the move was part of a portfolio rebalancing strategy, not a drawdown of reserves.
“It was sold for FX and invested. It is earning returns and contributing to reserve accumulation,” he said, adding that the Bank would reassess optimal gold holdings and re-accumulate over time.
Banking sector resilient
The banking sector recorded a strong performance in 2025, with total assets expanding on the back of growth in deposits, domestic borrowings and shareholders’ funds.
Financial soundness indicators showed the sector remained solvent, profitable and efficient, although the non-performing loan (NPL) ratio, at 18.9 per cent, remained elevated despite improving from 21.8 per cent in 2024.
The Governor said ongoing measures to resolve legacy loans, enforce stricter credit underwriting standards and address willful defaults are expected to further improve asset quality.
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