By explicitly linking the rate cut to a stable economic outlook, the central bank is sending a powerful signal to both domestic and international investors.
In a decisive move signaling confidence in the economy, the Bank of Ghana has slashed its benchmark interest rate by a substantial 350 basis points. This significant reduction brings the key policy rate down to 18.0%, marking one of the most aggressive easing cycles in the country’s recent history. The decision reflects a dramatic shift in the nation’s economic landscape over the past two years.
The primary driver behind this bold policy action is a remarkable and sustained fall in the national inflation rate. Official data shows that inflation has plummeted from a peak of 54% in early 2023 to a much more manageable rate of approximately 8% as of October 2025. This steep decline has provided the necessary room for monetary policy to pivot towards supporting growth.
Governor of the Central Bank, in a press briefing, stated that the economy’s outlook is now deemed stable enough to sustain the lower cost of borrowing. This assessment indicates that policymakers believe the worst of the price stability crisis has passed and that the focus can now shift to fostering a robust economic recovery without reigniting inflationary pressures.
To manage liquidity effectively in the financial system following this rate cut, the central bank has announced the renewed use of 14-day bills for its open-market operations. This tool will allow the bank to fine-tune market conditions and ensure that the increased liquidity does not lead to destabilizing volatility or reverse the gains made against inflation.
The Bank of Ghana’s 350-basis-point cut is part of a series of aggressive monetary easing measures implemented throughout the year. This consistent approach demonstrates a clear and confident strategy to normalize policy following a period of necessary tightness. The cumulative effect of these cuts is significantly reducing the cost of capital across the economy.
The journey from 54% inflation to single digits within a few years is a landmark achievement for Ghana’s economic managers. This success is attributed to a combination of tight monetary policy, fiscal discipline, and favorable external conditions. The sharp disinflation has restored a significant degree of purchasing power to consumers and businesses alike.
This forward guidance is crucial for building confidence, as it suggests that future policy will be predictable and focused on cementing the current economic stability. The reintroduction of 14-day bills is a key technical measure to support the new, lower interest rate environment. These short-term instruments provide the central bank with a flexible mechanism to absorb excess liquidity from the banking system, thereby helping to anchor inflation expectations and maintain financial stability.
This aggressive monetary easing cycle is expected to have widespread positive effects. Lower interest rates will reduce the cost of borrowing for businesses seeking to expand and for individuals financing major purchases. This stimulus is anticipated to spur investment, boost consumer spending, and accelerate overall economic growth in the coming months.
