Policy Rate Could Fall to 12.5% at Next MPC Meeting – Financial Expert

Financial Analyst Nelson Cudjoe Kuagbedzi has projected a further reduction in the policy rate, predicting that it could drop to 12.5 percent at the next Monetary Policy Committee (MPC) meeting.

Speaking on Business Breakfast on Zed 101.9FM, Mr. Kuagbedzi said he expects interest rates to decline steadily, driven in part by the Bank of Ghana Governor’s commitment to achieving a single-digit lending rate.

“I even expect the rate to go down further because we have a governor who is more tilted towards achieving a single-digit lending rate,” he stated.

According to him, if authorities are serious about attaining single-digit lending rates, then the current policy rate of 15.5 per cent will need to be reduced significantly.

He disclosed that he had earlier anticipated a cut to around 12.5 per cent and believes the rate could trend toward 10 per cent by mid-year.

“By the middle of the year, we can be inching towards 10 per cent. Once we hit 10 per cent, I can tell you for a fact that the Ghana Reference Rate will also come down appreciably,” he explained.

Mr. Kuagbedzi noted that the benchmark interest rate, represented by the 91-day Treasury bill rate, is already slightly above 10 percent

The Analyst also warned that high lending rates could derail efforts to grow the economy and create jobs, stressing that the private sector cannot expand under expensive borrowing conditions.

Mr. Kuagbedzi stressed that no economy can achieve meaningful growth when the cost of credit remains elevated.

“I’ve always maintained that if you want to grow an economy, you cannot grow an economy with such a high lending rate,” he stated.

He referenced this year’s national budget, which targets the creation of about 600,000 jobs, and questioned whether government alone could realistically deliver on that ambition within 2026.

“Is the government going to create those jobs alone? That would be practically impossible,” he said.

According to him, the private sector plays the dominant role in job creation, and its ability to expand depends heavily on access to affordable capital. However, when lending rates remain high, businesses, particularly small and medium-sized enterprises (SMEs) struggle to borrow, invest and employ more workers.

“If the cost of capital to the private sector is high, they can’t go and borrow from financial institutions, expand their operations and employ more people,” he explained.

Mr. Kuagbedzi emphasized that lending rates above 10 percent remain burdensome for most businesses, especially SMEs, which form the backbone of the economy.