Ghana has recorded one of its strongest external buffers in recent years, with gross international reserves rising to US$11.4 billion at the end of October 2025.
Riding on this robust external position, the Bank of Ghana has further eased its monetary stance, cutting the Monetary Policy Rate (MPR) by 350 basis points to 18 percent to support the ongoing economic recovery.
Announcing the decision at the 127th Monetary Policy Committee (MPC) press briefing on Wednesday, November 26, Governor Dr. Johnson Pandit Asiama, highlighted the significance of the reserve build-up, noting its central role in stabilising the cedi while strengthening macroeconomic fundamentals.
“The current account surplus, together with favourable balances in the capital and financial accounts, translated into an overall balance of payment surplus of US$1.8 billion and supported an accumulation of reserve assets to US$11.4 billion in October 2025, equivalent to 4.8 months of import cover,” he said.
The governor explained that the Committee’s decision to cut the policy rate was anchored on improved economic conditions, anchored inflation expectations, and a reduced risk outlook.
“Given the anticipated significant decline in inflation by the end of the year, the tight monetary policy stance, the significant build-up of reserves, which is providing anchor for exchange rate stability, the Bank projects a continued stable inflation profile around the target and well into the first half of 2026,” Dr. Addison said.
He added that risks to inflation have “moderated significantly,” creating scope to ease policy without undermining price stability.
Global and Domestic Developments
Providing a broader context, the governor noted that the global economy has remained resilient despite ongoing geopolitical tensions and volatile trade conditions. Financial conditions have improved worldwide, helping support stable growth.
“Global headline inflation has eased further on the back of lower energy and food prices,” he said, though cautioning that the pace of disinflation remains uneven.
On the domestic front, Dr. Asiama described Ghana’s economic recovery as strong and broad-based. Growth momentum remains upbeat, with provisional data showing 5.1 percent GDP growth in August 2025, up from 4.9 percent a year earlier, driven by agriculture and services.
The Bank’s Composite Index of Economic Activity (CIEA) recorded a significant improvement, rising 9.6 percent in September 2025, compared with 2.9 percent in 2024.
“Taken together, these gains indicate that the negative output gap is closing,” he told journalists, expressing optimism that full-year GDP growth would remain robust.
Inflation Back to Target
One of the most critical developments for the MPC was the dramatic fall in inflation. From 23.5 percent in January, headline inflation has dropped to 8.0 percent in October, the first time both food and non-food inflation have hit single digits since July 2021.
The governor attributed this achievement to sustained tight monetary policy, fiscal consolidation, a more stable cedi, and an improvement in food supplies. The Bank’s core inflation measure also showed significant moderation.
Inflation expectations across consumers, businesses and the banking sector are now well-anchored, with forecasts suggesting inflation will end the year between 6–8 percent.
Falling Interest Rates and Credit Recovery
Interest rates across the economy have eased in response to monetary policy adjustments.
The interbank rate fell from 27.7% in October 2024 to 21.0% in October 2025.
The 91-day Treasury bill rate dropped from 25.8% to 10.6% over the same period.
Average lending rates declined to 22.2%, from 30.5% to the a year earlier.
These improvements have helped stimulate credit to the private sector. After contracting by 7.1 percent in May 2025, real private-sector credit growth rebounded to 5.4 percent in October.
Fiscal Consolidation and Debt Reduction
Dr. Addison also highlighted stronger fiscal outcomes over the first nine months of 2025. Revenue fell slightly below target, but government spending was 15 percent below expectations, helping reduce the fiscal deficit to 1.5 percent of GDP, significantly better than the 3.2 percent target. Public debt declined sharply to 45 percent of GDP from 61.8 percent at the end of 2024 supported by debt management reforms and the appreciation of the cedi.
Stable Banking Sector
The banking sector remains strong, with improvements recorded in solvency, asset quality and profitability. The Non-Performing Loans (NPL) ratio dropped from 22.7 percent in October 2024 to 19.5 percent in October 2025.
The governor noted that recapitalisation of a few undercapitalised banks and the full rollout of new regulatory guidelines would further strengthen the sector.
BoG Returns to 14-day Bill
In addition to the rate cut, the Bank of Ghana announced it will revert to the 14-day bill as the main Open Market Operations (OMO) instrument, a move aimed at enhancing liquidity management.
Responding to questions about the reactivation of the 14-day bill as the Bank’s main liquidity tool, Dr. Addison explained that the instrument is not new.
“It has always existed. We are simply going back to where we are supposed to be operating on the very short end of the market,” he said. The Bank will discontinue the 56-day and 273-day bills, which were used temporarily. “Resetting to shorter tenors will improve liquidity management,” he added.
On whether the Bank could have cut the policy rate even further, the Governor said the decision was guided strictly by inflation dynamics and risk assessment. He contended that the 350-basis-point cut was consistent with his outfit’s programme and disinflation path. “We believe it is enough for now. If additional measures are needed, the Committee will take them.”
The Bank however cautioned against complacency despite the cedi’s strong performance.
“We are a commodity-dependent economy. If gold or cocoa prices shift suddenly, or if the US dollar strengthens, it will affect us. That is why reserve build-up is critical,” the Governor said.
He clarified that earlier projections referred to the full cocoa system, not just inflows expected before December.
On the proposed hedging programme for oil and gold, the Governor said the Bank was currently rebalancing its portfolios before determining whether hedging was necessary. “Hedging is not cheap. We haven’t abandoned it, but we’re focusing on rebalancing first,” he said.
The Governor addressed a question on whether banks could use part of their Cash Reserve Requirements (CRR) to support Licensed Buying Companies (LBCs), as proposed by COCOBOD. “Banks are free to lend to LBCs within regulatory limits, but the proposal to use CRR for that purpose is not on the table,” he said.
On claims that the Bank is financing Goldbod, the Governor offered a firm clarification:
“We are not funding Goldbod. They are providing a service to us purchasing gold, which is exported, and the Bank receives the foreign exchange.” He stressed that the Bank remains fully compliant with the IMF’s zero-financing requirement.
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