The Monetary Policy Committee (MPC) of the Bank of Ghana (BoG), has by majority decision reduced its monetary policy rate by 350 basis points (3.5%), from 25% to 21.5%.
In July, the MPC cut the benchmark rate by 300 basis points (3%) from 28% to 25%, and that was the biggest cut in recent times. Analyst had predicted that the cut this time round was going to be 200% basis points.
In announcing the historic cut, the Governor of the Bank of Ghana, Dr Johnson Asiama cited easing headline inflation and positive outlook on inflation, which is expected to decline into the Bank’s medium term target band of 8+-10% by the fourth quarter of 2025.
He said the big cut on the policy rate was by majority decision, adding that the Committee will however continue to monitor macroeconomic developments and take the appropriate policy decision as and when necessary to reinforce the disinflation process.
Given the reduction in the policy rate, interest rates on loans to businesses and households are expected to reduce, thereby moderating the cost of capital to the private sector.
