GRR Drops to 15.9% for December, Easing Borrowing Costs
By Praisebell Rosemond Larbi
The Ghana Reference Rate (GRR), the benchmark used by commercial banks to determine lending rates, has recorded a significant decline for December 2025, offering relief to both businesses and households as borrowing costs trend downward.
Fresh data from the Ghana Association of Banks shows that the GRR has fallen sharply from 17.93% in November to 15.9%, representing a substantial 200-basis-point drop within a single month. This marks one of the biggest monthly declines this year and reinforces expectations of a more accommodative credit environment going into 2026.
According to the Association, the downward adjustment was largely driven by improvements in the major variables used to compute the GRR. These include the Monetary Policy Rate (MPR), Treasury bill rates, and interbank market conditions. Commercial banks emphasised that the Bank of Ghana’s 350-basis-point cut in the policy rate to 18% was a major catalyst, supported by a modest decline in Treasury yields.
Background to the decline
The latest movement comes after the GRR inched up slightly in November, rising to 17.96% from 17.86% in October, influenced by marginal increases in Treasury bill and interbank rates. Prior to that, October saw a notable 2% drop in the GRR, continuing a general downward trend observed throughout 2025.
At the beginning of the year, the reference rate stood at 29.72% in January. It rose marginally to 29.96% in February, before beginning a consistent decline that brought it down to 19.67% by August 2025. Analysts attribute this sustained fall to tightening monetary policy earlier in the year and subsequent easing as inflation began to moderate.
Impact on lending and the economy
The significant drop in the GRR is expected to influence lending rates almost immediately, particularly for loans contracted in December. Banks use the GRR as the foundation for pricing credit, meaning borrowers should expect lower interest payments compared to previous months. While customers on fixed-rate facilities will not experience any changes, those with variable-rate agreements could see adjustments depending on their bank’s internal pricing model.
The decline is timely, especially for businesses facing liquidity constraints due to the tight policy measures implemented earlier to stabilise the economy. According to the latest Monetary Policy Report, the average lending rate has already eased from 26.6% to 24.2%, signalling improving credit conditions. Money market yields have also dropped, with the 91-day Treasury bill rate falling from 13.4% in July to 10.3% in August 2025.
About the GRR
Introduced in 2017 by the Bank of Ghana and the Ghana Association of Banks, the Ghana Reference Rate was designed to offer transparency and consistency in loan pricing. The inaugural GRR in April 2017 was 16.82%, and the framework has since become the central guide for lending rate decisions across the banking sector.
