Bank of Ghana Extends Easing Cycle With Fifth Rate Cut Amid Global Uncertainty

The Bank of Ghana has continued its monetary easing trajectory, lowering its benchmark interest rate for the fifth consecutive time as policymakers seek to sustain economic momentum despite rising global uncertainty.

At its latest Monetary Policy Committee meeting, the central bank reduced the Monetary Policy Rate by 150 basis points to 14 percent, marking its lowest level in over three years.

The latest adjustment reflects a more measured pace compared to earlier cuts, signalling a shift toward cautious easing as inflation stabilises and external risks intensify.

The decision comes as Ghana’s macroeconomic indicators show sustained improvement, particularly on the inflation front. Price growth has slowed significantly in recent months, creating room for the central bank to support economic expansion without immediately jeopardising price stability.

Governor Johnson Asiama said the easing stance remains justified given the current balance between inflation and growth. While acknowledging progress in disinflation, he noted that real borrowing costs remain relatively high, providing additional space for policy adjustments aimed at stimulating credit and investment.

The central bank’s outlook suggests that inflation is expected to remain within its medium-term target range, although emerging risks linked to global developments could introduce fresh pressures. Of particular concern is the recent rise in crude oil prices driven by escalating geopolitical tensions in the Middle East, which may translate into higher import costs and renewed inflationary pressure.

Despite these external risks, Ghana’s domestic conditions have provided a degree of resilience. Strong performance in the gold sector has supported foreign exchange inflows, helping to stabilise the local currency and reduce pressure on external balances. This has, in turn, enhanced the central bank’s ability to pursue a more accommodative policy stance.

The cumulative reduction in interest rates over the past year has been substantial, reflecting a deliberate effort by policymakers to reposition the economy toward growth after a prolonged period of tight monetary conditions. However, the moderation in the size of the latest cut indicates a recognition that the easing cycle may be approaching a more delicate phase.

Across the African continent, central banks are adopting varied approaches in response to the evolving global environment. While Ghana has continued to ease, some peers have opted to pause rate adjustments as they assess the potential impact of rising energy prices and geopolitical instability on inflation trajectories.

In Angola, policymakers recently held rates steady after a series of reductions, citing continued progress in inflation control but also acknowledging lingering risks.

Morocco has similarly maintained its benchmark rate, pointing to stable economic activity alongside heightened uncertainty in global markets.

Attention is now turning to South Africa, where monetary authorities are expected to make their next policy decision in the coming days.

Despite a decline in inflation, expectations suggest that policymakers may adopt a wait-and-see approach, particularly in light of rising oil prices and their potential impact on consumer prices.

For Ghana, the path ahead will depend on the interaction between domestic gains and external pressures. While easing inflation and improved economic fundamentals have supported the current policy direction, global developments, especially in energy markets, remain a key variable that could influence future decisions.

The central bank has indicated it will remain data-dependent, with a readiness to adjust its stance should inflation risks re-emerge.