The Bank of Ghana's Monetary Policy Committee (MPC) is projected to lower the policy rate by some 300 basis points to 25%, following a sharp decline in inflation to 13.7% in June 2025.

The projection comes after IC Research, which initially projected a 200 basis point cut, has now revised its outlook and anticipates a deeper reduction due to the improved inflation outlook.

“We now expect the MPC to cut the policy rate by at least 300 basis points,” the firm stated.

The real policy rate, calculated by subtracting inflation from the nominal policy rate, rose significantly to 14.3% in June, up from 9.6% in May.

With core inflation now in single digits, IC Research believes the central bank has room to implement a more aggressive rate cut than previously expected.

However, the firm also urged caution, noting that potential fuel tax hikes in the third quarter could impact inflation and exchange rate stability.

“We’re staying measured in our expectations to help preserve FX stability and prevent inflationary risks,” it added.

At its last meeting in May 2025, the MPC held the policy rate steady at 28%, citing the need to sustain progress in reducing inflation and protecting the cedi.

At the time, Bank of Ghana Governor Dr Johnson Asiama said the decision was informed by signs of easing inflation, effective monetary policy measures, a stable exchange rate, and efforts to reduce government spending.

Since then, both bond yields and lending rates have declined, signaling a potential policy rate cut at the upcoming MPC meeting.

DR/MA

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