Dr. Johnson Asiama
The Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) has reduced the policy rate by 350 basis points to 21.5 percent from 25 percent, citing a continued decline in inflation.
Governor of the central bank, Dr. Johnson Pundit Asiama, who announced the decision after the 126th MPC meeting, explained that the easing of inflationary pressures reflected prudent monetary policy and strong liquidity management. Other contributing factors included the appreciation of the cedi, fiscal consolidation, and improved food supply, he added.
According to him, inflation has continued to ease across board, with headline inflation declining further to 11.5 percent in August 2025, down from 12.1 percent in July.
Dr. Asiama stated, “Given these considerations, the Committee, by a majority decision, voted to lower the Monetary Policy Rate by 350 basis points to 21.5 percent.”
He further noted that the Bank’s core inflation measure, which excludes energy and utility items, also declined, reflecting sustained easing of underlying inflationary pressures.
“Similarly, inflation expectations among consumers, businesses, and the banking sector all eased, affirming the disinflation process going forward. Interest rates are declining on the money market in response to the recent cut in the monetary policy rate,” he added.
The BoG Governor pointed out that yields on money market instruments had dropped significantly, with average lending rates also gradually easing.
On fiscal performance, the central bank boss indicated that policy implementation up to July 2025 reflected strong consolidation efforts underpinned by tight expenditure controls.
He said despite revenues falling short of target, the overall fiscal deficit on a commitment basis stood at 1.1 percent of GDP, outperforming the target deficit of 2.1 percent.
Dr. Asiama also reported that the banking sector recorded robust performance over the first eight months of the year, with continued asset growth, improved profitability, and stronger asset quality and efficiency indicators.
He said the industry’s capital adequacy ratio, excluding regulatory reliefs, rose to 17.7 percent in August 2025 from 10.2 percent in August 2024, while the Non-Performing Loan (NPL) ratio improved to 24.8 percent over the same period due to growth in bank credit and a contraction in the NPL stock.
He stressed, however, that despite the easing inflation trend, the Committee will continue to monitor macroeconomic developments closely and take policy action when necessary to sustain the disinflation process.
By Ebenezer K. Amponsah