BoG's Big Move: Monetary Policy Rate Cut to Boost Employment and Economic Growth

 

The Bank of Ghana has reduced its Monetary Policy Rate by 350 basis points to 18 percent. This marks one of the steepest policy easing decisions in recent years.

The Central Bank cut the rate over sustained progress in taming inflation, a stabilising currency and improved macroeconomic conditions that create room to support growth.

The Bank of Ghana's decision to slash its Monetary Policy Rate from 21.5% to 18% is expected to have a significant impact on employment and economic expansion.

According to Governor Dr. Johnson Asiama, the economy has entered a period of improved stability, with a strong rebound in the external sector and a stable inflation profile. This has created room for the Central Bank to reduce the policy rate, making borrowing cheaper and increasing access to credit for businesses and households.

The reduction is expected to translate into lower lending rates, offering relief to businesses and households that have struggled with high borrowing costs. This, in turn, is expected to lead to increased employment and expansion of production, contributing to the overall development of the country.

With risks to the inflation outlook receding and real interest rates remaining significantly high, the Committee judged that conditions were right to reduce the policy rate to stimulate economic activity," Dr. Asiama said.

The move is also expected to boost economic growth, with the Central Bank projecting a continued stable inflation profile around the target and well into the first half of next year.

Governor Dr. Johnson Asiama stressed that "The economy has entered a period of broadly improved stability, anchored by a strong rebound in the external sector."

According to the Monetary Policy Committee, it will continue to closely monitor domestic and external developments and take necessary policy actions to sustain the current economic momentum. This latest reduction brings the total policy rate cut to 1,000 basis points in 2025 alone, making it one of the most aggressive easing cycles in recent years.