The Bank of Ghana (BoG) has announced a 200-basis-point reduction in its Monetary Policy Rate, lowering it to 27%. This marks the second rate cut since 2021, aimed at providing relief to borrowers and reflecting the easing of inflationary pressures.
Previously, the policy rate was held at 29% for nine months, following a reduction from 30% in January. The new rate is expected to offer borrowers some relief, at least for the next two months.
During the 120th Monetary Policy Committee press briefing on Friday, September 27, BoG Governor Dr. Ernest Addison explained that the rate cut is in response to improvements in inflation and the broader economy.
“Preliminary data since the last MPC meeting in July 2024 indicates that macroeconomic conditions have generally improved. Headline inflation has eased, and growth has picked up,” Dr. Addison said.
He noted that fiscal policy implementation has been strong, contributing to growth, while monetary conditions have remained tight to support the disinflation process.
“Headline inflation has declined for five consecutive months by 5.4 percentage points, and core inflation has also dropped sharply by 6.9 percentage points over the same period. These trends indicate that the disinflation process is progressing,” he added.
The Bank’s latest forecasts suggest that inflation will continue to decline toward the target range of 13-17% for 2024 and could reach the medium-term target of 6-10% by the end of 2025, provided there are no unforeseen shocks. Given this outlook, the Monetary Policy Committee deemed it appropriate to lower the rate to 27%.
