Banks cut Reference Rate to 17.86% for October

The Ghana Association of Banks (GAB) has announced a reduction in the Ghana Reference Rate (GRR) to 17.86 per cent for October 2025, representing a two-percentage-point drop from 19.86 per cent in September.

The adjustment is expected to ease borrowing costs across the banking sector and provide relief to businesses and individuals with loans tied to the benchmark rate.

The GRR, which serves as the base reference for loan pricing, has been on a steady decline since the beginning of the year.

In January 2025, the rate stood at 29.72 per cent, inching up slightly to 29.96 per cent in February before recording sustained reductions over the past six months.

By August, the rate had fallen to 19.67 per cent, underscoring a clear disinflationary trend in the economy.

The central bank has cut the benchmark policy rate by more than 600 basis points this year, bringing it to 21.5 per cent.

According to the BoG’s most recent Monetary Policy Report, average lending rates have already declined from 26.6 per cent to 24.2 per cent, reflecting the effect of earlier reductions in the GRR and policy rate.

Yields on money market instruments have also trended downward, with the 91-day treasury bill rate falling from 13.4 per cent at the end of July 2025 to 10.3 per cent in August.

For businesses with variable-rate loans, the drop in the GRR could translate into lower monthly repayments once banks adjust their lending terms.

New borrowers are also expected to benefit from cheaper credit facilities, creating room for expanded investments and working capital financing.

The GRR, introduced jointly by the Bank of Ghana and GAB in 2017, was designed to enhance transparency in loan pricing and provide a uniform benchmark for interest rate determination.

The maiden rate was set at 16.82 per cent in April 2017.