BoG’s 18% Policy Rate Marks Turning Point for Economy – Ato Forson
By Praisebell Rosemond Larbi
The Minister of Finance, Dr. Cassiel Ato Forson has described the Bank of Ghana’s latest decision to reduce the monetary policy rate to 18 percent as a “major turning point” in Ghana’s economic recovery, marking the lowest rate the country has seen in more than three years and signalling a profound shift in the macroeconomic outlook.
The Central Bank on Wednesday announced a 350-basis point reduction in its benchmark rate following the conclusion of the Monetary Policy Committee’s (MPC) 127th meeting, one of the steepest rate cuts in recent policy history. With inflation easing steadily and key economic indicators stabilising, policymakers say the move reflects growing confidence in the strength of Ghana’s recovery.
Reacting to the development in a statement shared on X (formerly Twitter), Dr. Forson said the rate cut “reflects renewed economic confidence” and marks a decisive moment in the country’s transition from crisis response to growth acceleration. According to him, the policy action will have powerful ripple effects across all sectors of the economy, easing credit conditions, boosting investment, and reducing cost pressures on households and businesses.
“The Bank of Ghana’s monetary policy easing continues,” he wrote, noting that inflation has now dropped to 8 percent as of October 2025, down from a peak of 27 percent in November 2024. This dramatic decline, he said, provides the needed macroeconomic space for lowering borrowing costs and stimulating economic activity.
The Finance Minister stressed that the 18 percent policy rate will unlock “greater room for businesses and individuals to grow, invest, and create jobs,” describing it as a timely catalyst for private-sector expansion. For many Ghanaian firms, particularly those in manufacturing, agribusiness, construction, and services access to affordable credit remains a long-standing constraint. The latest cut, analysts say, could help reverse that trend by encouraging banks to reduce lending rates further.
Dr. Forson also underscored the broader implications of the rate shift for financial stability and investor confidence. “The move reflects renewed economic confidence, and it means lower borrowing costs, improved access to credit, and greater room for businesses and individuals to grow,” he said. He added that the policy environment is becoming increasingly supportive of growth, investment, and job creation, especially as Treasury yields continue to fall and liquidity conditions improve.
Economists have generally welcomed the Central Bank’s decision, arguing that the earlier, tighter monetary stance successfully anchored inflation expectations and stabilised the cedi, creating the space now being used to ease policy. With headline inflation now well within the Central Bank’s medium-term target band, the reduced rate signals a gradual return to normalcy after a period of aggressive tightening between 2022 and 2024.
Market observers say the timing of the cut is strategic. The economy is showing stronger signs of recovery, including improved export performance, better reserve buffers, easing supply bottlenecks, and renewed business confidence. Lower interest rates, they argue, are needed to sustain this momentum and encourage banks to increase credit to the private sector.
Commercial banks are expected to reprice loans in the coming weeks, though the speed and extent of the reduction will likely vary depending on their risk assessments and liquidity positions. Nevertheless, the policy shift is widely seen as a boost for investors, entrepreneurs and households who have endured several years of elevated borrowing costs.
Concluding his remarks, Dr. Forson said the policy direction is clear and encouraging. “The recovery is clearly strengthening, and it can only get better,” he stated, projecting a more favourable economic landscape in the months ahead as both fiscal and monetary measures align to support expansion.
