The Bank of Ghana policy rate is likely to remain unchanged at 14.00% when the Monetary Policy Committee (MPC) announces its latest decision, with pressure on international reserves and the cedi complicating the case for another interest rate cut.
An analysis suggests that although inflation remains below the central bank’s target band, emerging risks could persuade policymakers to maintain the current rate.
Headline inflation stood at 5.00% in August, below the Bank’s target of 8.00%, plus or minus two percentage points. That leaves the policy rate nine percentage points above annual inflation.
The MPC, however, is assessing more than the latest consumer price figures. Governor Dr Johnson Pandit Asiama has identified inflation, Ghana’s external position and fiscal developments as key issues before the Committee’s 132nd meeting.
Low Inflation Strengthens Case for Further Easing
Ghana’s inflation figures provide an argument for lower borrowing costs.
Food inflation declined to 3.00% in August, while core inflation excluding energy and utilities stood at 4.20%.
Economic activity has also remained firm. Gross domestic product expanded by 6.00% in the second quarter, while private-sector credit continued to grow.
The Bank of Ghana has already reduced its benchmark rate substantially, from 25.00% in August 2025 to 14.00% in March 2026.
Some of that easing has reached borrowers. The average bank lending rate fell from 24.15% a year earlier to 15.94% in August.
Treasury bill yields have also declined, with the 91-day instrument yielding 5.38% in August.
For businesses, another policy rate reduction could provide additional relief. The difficulty is that inflation’s recent direction has become less favourable.
Non-Food Prices Raise Fresh Concerns
Headline inflation fell to 3.20% in March but climbed to 5.00% by August, despite easing briefly in July.
Non-food inflation rose from 3.90% in March to 6.80% in August, suggesting that falling food prices may be masking stronger cost pressures elsewhere.
Higher energy prices and administered tariffs could add to those pressures.
The MPC must determine whether the recent increase represents a temporary adjustment or the beginning of more persistent inflation.
Cutting rates before that distinction becomes clearer could complicate efforts to contain future price increases.
Falling Reserves Become Major Constraint
Ghana’s external position presents a more immediate challenge.
Gross international reserves declined from US$14.16 billion in March to US$11.07 billion in August, a reduction of approximately US$3.09 billion.
Import cover fell from 5.7 months to 4.2 months over the same period.
Net international reserves also declined, from US$11.87 billion to US$8.69 billion.
There has since been a partial recovery. According to the figures reviewed by NorvanReports, gross reserves reached US$12.05 billion by September 22, equivalent to 4.5 months of import cover.
Still, the Governor has warned that slower gold shipments and increased foreign exchange demand could place renewed pressure on Ghana’s external buffers.
The cedi’s reported 9.50% depreciation against the dollar since the beginning of the year adds another concern, particularly as higher global oil prices raise import costs.
MPC Faces a Difficult Balancing Decision
Government spending and debt-service obligations are also under scrutiny because of their potential effects on liquidity and the exchange rate.
The decision now centres on whether the benefits of cheaper credit outweigh the risks of renewed inflation and currency pressure.
This assessment points towards a hold at 14.00%, rather than an immediate increase or further reduction.
The MPC’s announcement will establish whether policymakers share that assessment and how they intend to balance economic growth against Ghana’s changing inflation and reserve outlook.
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