Ghana Policy Rate Cut to 18%: Finance Minister Hails Milestone in Economic Recovery – Lowest Since March 2022

Published: November 27, 2025 | Explore the Bank of Ghana’s latest monetary policy decision, slashing the policy rate to 18% amid declining inflation. This guide breaks down the implications for Ghana’s economy, businesses, and households.

Introduction

Ghana’s economic landscape is showing signs of strengthening recovery, highlighted by the Bank of Ghana’s (BoG) recent monetary policy decision. On November 27, 2025, Finance Minister Dr. Cassiel Ato Forson praised the central bank’s move to lower the policy rate to 18%—the lowest level since March 2022. This 350 basis point reduction signals growing stability in the economy and a sharp decline in inflation, which dropped to 8% in October 2025 from a peak of 27% in November 2024.

What is a policy rate? In simple terms, it’s the benchmark interest rate set by the central bank to influence borrowing costs across the economy. By cutting it, the BoG aims to encourage lending, reduce credit pressures on businesses and households, and foster job creation and investment. This pedagogical overview explains the Ghana policy rate cut’s background, effects, and what it means for everyday Ghanaians and investors searching for updates on Ghana inflation rate trends and Bank of Ghana monetary policy.

Analysis

Understanding the Policy Rate Cut

The Bank of Ghana’s Monetary Policy Committee (MPC) announced the policy rate reduction from 21.5% to 18%, marking a significant easing in monetary policy. A basis point is one-hundredth of a percentage point, so 350 basis points equals a 3.5% drop. This is the deepest cut in recent history, reflecting sustained disinflation— the process of reducing inflation rates.

Ghana’s inflation journey has been volatile. In November 2024, headline inflation hit 27%, driven by food prices, currency depreciation, and global pressures. By October 2025, it stabilized at 8%, entering single digits. This trend aligns with improved fiscal discipline, better agricultural output, and stabilizing cedi exchange rates, as verified by BoG reports.

Economic Context in Ghana

Ghana’s economy has faced challenges post-COVID-19, including debt restructuring under the IMF program and high borrowing costs. The policy rate, previously hiked to combat inflation, now eases as core inflation moderates. Dr. Ato Forson noted this as a “big milestone in Ghana’s financial restoration,” emphasizing renewed confidence. Economists, including those from BoG, anticipate this will stimulate private-sector activity, boost manufacturing, and enhance job creation by making credit more affordable.

Pedagogically, think of the policy rate as the economy’s “thermostat.” High rates cool overheating (high inflation); cuts heat up growth when inflation cools. This move positions Ghana for accelerated recovery, with lower borrowing costs improving access to loans for small and medium enterprises (SMEs) and individuals.

Summary

In summary, the Bank of Ghana’s policy rate cut to 18%—lowest since March 2022—has been hailed by Finance Minister Dr. Cassiel Ato Forson as evidence of economic stability and declining inflation to 8%. This 350 basis point slash from prior levels aims to ease lending, support businesses, and drive growth. Key highlights include boosted credit access, job creation potential, and a shift toward a more enabling business environment in Ghana.

Key Points

Practical Advice

For Businesses and SMEs

If you’re a business owner in Ghana, this policy rate cut is timely. With borrowing costs falling, now is ideal to refinance existing loans or expand operations. For instance, manufacturing firms can access cheaper working capital for inventory or equipment. Approach commercial banks for variable-rate loans, as they typically mirror BoG’s policy rate. Track your debt service coverage ratio—aim for at least 1.5x to ensure sustainability.

For Households and Individuals

Homeowners with mortgages or personal loans will see reduced monthly payments on floating-rate debts. Budget for potential savings: a 3.5% rate drop on a GHS 100,000 loan could save thousands annually. Consumers should prioritize fixed deposits or savings accounts yielding above inflation (currently over 8%) to grow wealth. First-time borrowers, improve your credit score via consistent repayments to capitalize on easier credit.

For Investors

Equity investors in the Ghana Stock Exchange (GSE) may see gains as lower rates boost corporate profits. Shift from fixed-income bonds to growth stocks in sectors like banking and telecoms. Monitor Treasury bill auctions, as yields may decline post-cut. Diversify with a mix of local and international assets to hedge cedi risks.

This advice empowers users querying Ghana economic recovery tips or Bank of Ghana rate cut impacts.

Points of Caution

Inflation Rebound Risks

While inflation is at 8%, external shocks like oil price hikes or supply chain issues could reverse gains. The BoG remains vigilant, with data-dependent future decisions.

Credit Risks for Borrowers

Cheaper loans tempt over-borrowing. Businesses must assess cash flows; individuals avoid lifestyle inflation. Non-performing loans rose in past easing cycles—maintain buffers.

Currency and Global Factors

The cedi’s stability supports this cut, but U.S. Federal Reserve actions could pressure it. Stay informed via BoG’s monthly reports.

These cautions ensure balanced understanding of Ghana monetary policy risks.

Comparison

Historical Policy Rates in Ghana

Compared to March 2022’s 17%, today’s 18% is marginally higher but contextually lower amid better inflation control. Peaks hit 22% in 2022 during inflation surges. This cut mirrors 2023 easings but is deeper at 350 bps versus prior 100-200 bps steps.

Vs. Regional Peers

Nigeria’s rate stands at 27.5% (2025 data), Kenya at 12.5%. Ghana’s 18% positions it mid-range, balancing growth and stability better than high-rate Nigeria amid similar inflation fights.

Such comparisons highlight Ghana’s progress in African central bank policy rates.

Legal Implications

The Bank of Ghana operates under the Bank of Ghana Act, 2002 (Act 612), empowering the MPC to set the policy rate independently for price stability. This cut complies fully, with no legal challenges noted. Finance Minister’s comments are advisory, not binding, preserving central bank autonomy as per law. No direct legal risks for market participants arise from this decision.

Conclusion

The Ghana policy rate cut to 18% underscores a pivotal moment in the nation’s economic recovery. Finance Minister Dr. Cassiel Ato Forson’s optimism—”The recovery is clearly strengthening”—resonates with falling inflation to 8% and easing monetary policy. Businesses, households, and investors stand to benefit from lower borrowing costs, enhanced credit access, and growth opportunities. As Ghana enters this new phase of acceleration, staying informed on BoG updates will be key. This development bodes well for sustained prosperity.

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