Lending rates to drop below 20% in 2025
The nation’s lending rates are forecast to fall from current highs of around 28 per cent to below 20 per cent in 2025, driven by a softer monetary policy stance and improving economic fundamentals, according to a new market outlook by Databank Research.
The investment firm attributes the expected decline to a steady disinflation trend moving towards the Bank of Ghana’s medium-term target band of 8 per cent ± 2 percentage points. Databank anticipates that the central bank could deliver a 200-basis-point policy rate cut in November 2025, reflecting confidence that inflation will remain anchored.
Databank is maintaining its 2025 inflation forecast at 12 per cent ± 2 points, with a bias towards the lower bound of 10 per cent.
Key factors supporting the disinflationary outlook include easing international crude oil prices, a stable cedi, and improved domestic food supplies during the peak harvest season in the third quarter.
These developments are expected to reinforce downward pressure on consumer prices and create space for further monetary easing.
Lower policy rates are projected to push the Ghana Reference Rate (GRR) below 19 per cent by the end of 2025. This would reduce commercial banks’ base lending rates, making credit more affordable for businesses and households.
Cheaper borrowing costs are also expected to stimulate economic activity, with the Composite Index of Economic Activity (CIEA) forecast to rise to 2.5 per cent in 2025, up from 1.5 per cent in 2024.
Despite the improved macroeconomic environment, Databank projects only a modest reduction in the banking sector’s Non-Performing Loan (NPL) ratio, from 23 per cent to 21 per cent, noting that legacy high-interest loans continue to weigh on repayment capacity.
However, sustained monetary easing combined with gradual income recovery is expected to strengthen banks’ asset quality and financial soundness over time.
