Accra: The Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) has made the decision to reduce the policy rate by 150 basis points, bringing it down to 14 percent. This move is attributed to favorable domestic macroeconomic conditions and historically low inflation, despite increasing geopolitical tensions in the Middle East.
According to Ghana News Agency, Dr. Johnson Pandit Asiama, the Governor of the Central Bank, announced the decision during the 129th MPC briefing in Accra. He sought to alleviate concerns regarding the impact of the rate cut-from the previous 15.5 percent to 14 percent-on the country's disinflation process. This new rate marks the lowest since July 2021, when it was 13.5 percent, before subsequent increases peaked at 30 percent in September 2023.
Dr. Asiama emphasized that the rate cut reflects the MPC's assessment that the prevailing real interest rates allow for monetary policy accommodation without undermining the Central Bank's price stability mandate. He highlighted a sustained recovery across multiple economic indicators, noting a decline in headline inflation to 3.3 percent in February 2026, well below the medium-term target band of six to 10 percent.
The Governor acknowledged the rising geopolitical tensions in the Middle East, which have increased uncertainty in the external sector. However, he pointed out that the continued improvements in the domestic economy, even in the first two months of 2026, are encouraging. The Central Bank's latest forecast suggests that headline inflation will remain within the medium-term target, although risks persist, including potential impacts from higher crude oil prices and escalating geopolitical tensions.
Despite these challenges, the MPC's decision to reduce the policy rate by 150 basis points is underscored by favorable domestic macroeconomic conditions and high prevailing real interest rates, which provide room for further easing. Ghana's economic performance has surpassed expectations across key indicators, with the composite index of economic activity recording an annual growth of 8.4 percent in January 2026, compared to six percent in 2025.
Dr. Asiama referenced provisional data for January to December 2025, showing an overall fiscal deficit on a commitment basis of one percent of GDP, significantly below the budget target of 2.8 percent. The primary balance recorded a surplus of 2.6 percent of GDP, exceeding the target of 1.5 percent, thanks to constrained government spending due to commitment control measures despite revenue shortfalls.
Public debt stock declined to 45.3 percent of GDP at the end of December 2025, from 61.8 percent at the end of December 2024, attributed to fiscal consolidation, debt restructuring, and nominal GDP growth. The banking sector's assets grew, driven by investments, which increased by 57.5 percent, compared to 8.6 percent growth in February 2025, with improvements in profitability, liquidity, solvency, asset quality, and efficiency.
The Central Bank Governor highlighted increased credit to the private sector, rising industrial production, expanding international trade activities, and growing household consumption as key drivers of economic growth. The non-performing loans (NPLs) ratio declined to 18.7 percent in February 2026 from 22.6 percent a year earlier, driven by a pickup in bank credit and a contraction in the NPL stock.
Trade surplus improved to $3.7 billion in the first two months of 2026, compared to $2.1 billion in 2025, while gross international reserves increased to $14.8 billion, equivalent to 5.8 months of import cover as of the end of February 2026. The Governor expressed optimism that the rate cut would reduce borrowing costs for businesses and households, potentially accelerating private sector credit growth and supporting continued economic expansion.
However, he cautioned that rising geopolitical tensions in the Middle East have added uncertainty to the external environment, indicating the Central Bank's readiness to take appropriate policy actions to safeguard price stability.