Accra: The Bank of Ghana's Monetary Policy Committee (MPC) is projected to reduce the policy rate by 150 basis points to 12.5 percent at its meeting in September 2026. This anticipated move was reported by Databank Research, aligning with the ongoing adjustment in inflation towards the Bank of Ghana's medium-term target band of 8 percent ±2 percent.
According to Ghana Web, the investment research firm highlighted that despite external shocks, monetary policy in the first half of 2026 followed a cautious easing trajectory. The firm maintained its expectation of two rate cuts for the year, following the initial reduction in March 2026 that brought the policy rate down to 14 percent. This projection comes on the heels of the MPC's decision to keep the policy rate at 14 percent in July 2026 after the earlier rate cut in March.
Databank Research emphasized that the monetary policy environment has remained conducive to economic activity, though inflationary pressures re-emerged during the first six months of the year. Inflation rose to 5.3 percent in June 2026 from 3.8 percent in January, primarily driven by renewed price pressures from energy and imported inputs. However, the firm noted that monthly inflation remained relatively stable, indicating that the underlying disinflation process has not been entirely disrupted.
Credit transmission has also shown improvement, as reported by Databank. Easier financial conditions have bolstered the transmission of monetary policy to the economy, especially through private-sector credit. Year-on-year, private-sector credit growth increased by 41.2 percent in nominal terms and 34.1 percent in real terms, demonstrating robust lending activity despite existing economic uncertainties. The banking sector sustained strong capital buffers, with the industry-wide Capital Adequacy Ratio (CAR) at 20.4 percent, and improved asset quality, reflected by a decline in the industry's gross non-performing loan (NPL) ratio to 16.1 percent.
Databank noted that the synergy of stronger credit growth, sufficient bank capital, and enhancing asset quality provides an opportunity for further monetary easing. The firm's analysis underscores solid capital buffers and a gradual improvement in asset quality.
Nevertheless, the prospect of further rate cuts is contingent upon developments in the global and domestic economy. During its July meeting, the MPC maintained the policy rate at 14 percent amidst concerns about escalating global prices, transport costs, and renewed conflict in the Middle East. The Committee acknowledged that external shocks might instigate renewed inflationary pressures, particularly through energy and imported goods.
Databank's forecast for September indicates that the MPC might resume its easing cycle if the disinflation trend remains largely intact and external risks do not significantly undermine price stability. A 150-basis-point cut would bring the policy rate to 12.5 percent, further reducing borrowing costs and potentially enhancing credit transmission to businesses and households. This move would mark another notable step in the central bank's gradual transition towards a less restrictive monetary policy stance, following the initial rate cut in March. However, the balance between fostering economic growth and managing renewed inflationary pressures is expected to be a central consideration in the MPC's September decision.