Ghana's benchmark reference rate for bank lending has witnessed its steepest monthly decline this year, offering a boost for businesses and consumers entering the final month of 2025.
The Ghana Reference Rate (GRR) fell sharply from 17.93% in November to 15.9% in December, a notable 200-basis-point drop driven by improvements across key macroeconomic indicators.
The decline is attributed to the Bank of Ghana's recent 350-basis-point cut in the Monetary Policy Rate (MPR) to 18%, alongside moderating Treasury bill yields and easing interbank market rates. This development is expected to reduce borrowing costs across the banking sector, with commercial banks likely to adjust their lending rates downward over the month.
The decline in the GRR to 15.9% means that borrowers and businesses can expect lower interest rates on loans, making borrowing cheaper. To be sure, new borrowers will face lower interest charges on loans contracted in December, making it more affordable to borrow. Businesses and individuals with variable-rate loan agreements may experience marginal downward adjustments in their interest rates, reducing their borrowing costs.
The decline in GRR is expected to improve access to credit, particularly for SMEs, as banks become more willing to lend at lower interest rates. The reduction in GRR is a sign of easing monetary policy, which could lead to more favorable lending conditions, including longer repayment periods and lower fees.
However, borrowers with fixed-rate loan agreements will not see any changes in their interest rates. While the GRR decline is expected to lead to lower lending rates, banks may adjust their rates at different paces, and some may not pass on the full reduction to borrowers.
Overall, the decline in GRR, which is a key indicator of borrowing costs in the country, is a positive development for borrowers and businesses, making it more affordable to borrow and access credit.
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