Interest Rates Fall Sharply as Private Sector Credit Begins to Recover – BoG
By Praisebell Rosemond Larbi
Interest rates across Ghana’s financial markets have fallen sharply over the past year, easing borrowing pressures on businesses and supporting a gradual but notable rebound in private-sector credit, according to the Bank of Ghana’s latest Monetary Policy Committee (MPC) update. The Central Bank says the renewed decline in market rates is feeding into improved credit growth, rising business confidence, and a more supportive financing environment heading into 2026.
Addressing journalists in Accra, Governor Dr. Johnson Pandit Asiama said the financial system is beginning to reflect the results of sustained macroeconomic stability, decisive monetary policy actions, and easing inflation. He explained that one of the clearest indicators of this progress is the sharp drop in the benchmark Treasury bill rate. “The interest equivalent of the 91-day Treasury bill rate declined to 10.6 percent in October 2025, from 25.8 percent in October 2024,” he said. According to him, this dramatic correction signals renewed investor confidence and a more stable interest-rate environment.
Commercial bank lending rates have also eased significantly, offering relief to businesses that have struggled with high borrowing costs over the last two years. “Average bank lending rate declined to 22.2 percent compared with 30.5 percent in the same comparative period,” Dr. Asiama noted. While lending rates remain relatively high, the Bank of Ghana believes the direction of movement provides a strong foundation for deeper cuts in the months ahead.
The impact on private-sector financing is already becoming visible. After contracting by 7.1 percent in May 2025, private-sector credit has rebounded, recording 5.4 percent real growth as of October 2025. The sharp turnaround, analysts say, signals a recovery in business demand for credit as well as improved bank willingness to lend.
Financial analysts attribute the trend to several interconnected factors: falling inflation, enhanced liquidity conditions, and stabilisation of the Ghana cedi. Headline inflation once the main constraint to policy easing, dropped dramatically from 23.5 percent in January to 8 percent in October 2025, hitting the Bank’s central target band for the first time since the economic shocks of 2022. Lower inflation has reduced lending risks and strengthened the Bank’s confidence in loosening monetary conditions.
“The decline in inflation and market rates is giving businesses breathing room,” said one Accra-based economist. “Manufacturers, agribusinesses, transport operators and service providers are now seeing improved borrowing conditions that can support expansion.”
The Central Bank’s assessment shows that banks are entering the final quarter of the year in stronger financial health. Non-performing loans (NPLs) fell to 19.5 percent in October, down from 22.7 percent a year earlier. Improved asset quality and profitability are allowing banks to gradually shift focus back toward lending rather than balance-sheet repair.
Sectors that rely heavily on working capital and medium-term financing, including manufacturing, construction, trade and supply-chain services are expected to benefit most from the easing borrowing conditions. Better credit availability, coupled with improved business sentiment, is likely to support job creation and investment as firms begin to plan for 2026.
Despite the progress, economists warn that sustaining the lending recovery will require disciplined macroeconomic management. They emphasise the need to maintain low inflation, preserve fiscal stability, and keep the currency broadly stable to avoid sudden reversals in interest-rate trends.
For now, however, the Bank of Ghana maintains that the financial system is on a firmer footing. With market rates falling, credit conditions improving, and inflation stabilising at record-low levels, policymakers say Ghana’s economic recovery is gaining strength, one interest-rate cut at a time.
