Bank of Ghana Cuts Interest Rate by 10% in 2025
Ghana has reduced its main interest rate by 10% since the beginning of 2025 as inflation moderated significantly as a result of better monetary policy direction versus most African countries, especially Nigeria.
Inflation is damaging, but a high interest rate environment is more damaging, as there are levels of inflation that a country can accommodate with systematic monetary policy design.
Last week, the Bank of Ghana (BOG) cut its main interest rate by 350 basis points to 18.00%, marking a cumulative 1,000 basis point reduction so far in 2025.
According to analysts, this decision followed the improving macroeconomic conditions, particularly a sharp decline in consumer inflation to 8.00% in October 2025 from 9.42% in September 2025.
Ghana had faced running inflation rate of 23.48% at the start of the year, with a negative impact on consumption and growth as private sector activities tightened.
The monetary policy committee of the Bank of Ghana reduced the interest rate as the consumer price index eased successively, paving the way for a lower interest rate as part of an expansionary policy drive.
The significant interest rate cut is expected to reduce borrowing costs for businesses and consumers, potentially boosting investment, consumption, and economic growth within the country, according to Meristem Securities Limited.
“This should also reduce debt servicing for government and private sectors, improving fiscal and financial conditions.
“We expect the Bank of Ghana to maintain its easing cycle as inflation tends towards the lower band of the Bank’s 6–10% target band and food prices continue to moderate.
“We also anticipate stronger real-sector expansion as lower financing costs improve credit conditions. Additionally, the recent removal of U.S. tariffs on Ghanaian agricultural exports (as stated earlier) should strengthen the trade balance and provide an added boost to growth”, Meristem said in a note.
