IMF Warns BoG Against Early Policy Rate Cuts
By Praisebell Rosemond Larbi
The International Monetary Fund (IMF) has urged the Bank of Ghana (BoG) to maintain a cautious monetary policy stance despite recent rate cuts, warning that premature easing could undermine the country’s hard-won gains in disinflation and macroeconomic stability.
The call comes as the central bank continues to unwind its tight policy cycle, having lowered the Monetary Policy Rate (MPR) by a cumulative 650 basis points so far in 2025.
At its most recent meeting in September 2025, the BoG implemented a record 350-basis-point reduction, bringing the key lending rate down to 21.5 percent, following an earlier 300-basis-point cut in July from 28 percent to 25 percent.
The IMF acknowledged that Ghana’s decisive policy tightening over the past two years has helped tame inflation, which fell sharply from 24 percent in 2024 to 9.4 percent in September 2025, marking a return to single-digit territory for the first time in nearly a decade. The economy also expanded by 6.3 percent year-on-year in the second quarter of 2025, supported by fiscal restraint, exchange rate stability, and improved investor confidence.
However, the Fund cautioned that maintaining this trajectory requires discipline and careful calibration of monetary tools.
Speaking to the media, IMF Resident Representative to Ghana, Dr. Adrian Alter, commended the BoG for its decisive and credible approach but stressed that vigilance remains key.
“The Bank of Ghana has kept its monetary policy consistently tight and managed to reduce inflationary pressures through prudent policies,” Dr. Alter said.
He explained that even with the recent rate cuts, Ghana’s real interest rates remain above historical averages a sign that monetary conditions are still restrictive enough to anchor inflation expectations.“What the IMF team advised the BoG is to keep a prudent monetary policy so that inflation expectations can firmly re-anchor within single digits. You need to keep monetary policy tighter than usual to have these expectations remain well anchored within the monetary policy band,” Dr. Alter noted.
The IMF official emphasized that sustaining this cautious stance, alongside fiscal discipline, would consolidate the recent disinflation gains, bolster investor confidence, and safeguard external buffers.
Analysts say the Fund’s advice reflects the delicate balancing act facing Ghana’s monetary authorities, ensuring that policy remains supportive of growth without reigniting price pressures that could reverse the recent progress toward stability.
As the BoG prepares for its next Monetary Policy Committee meeting, market watchers will be closely monitoring whether the central bank maintains its tightening bias or opts for a pause to assess the impact of earlier rate adjustments on credit growth and inflation expectations.
