The Bank of Ghana (BoG) delivered a significant policy surprise on January 28, 2026, by cutting its Monetary Policy Rate (MPR) by 250 basis points to 15.5%, down from 18%, the lowest level since March 2022. This decision, taken by majority vote at the 128th Monetary Policy Committee (MPC) meeting held from January 26–28, marks the central bank’s first policy action of 2026.

Governor Dr. Johnson Pandit Asiama announced the cut at a press briefing at the Bank Square, underscoring a forward-looking stance aimed at supporting economic growth while maintaining price stability. This move builds on a broader easing cycle that began in 2025, when the BoG reduced the MPR from its peak of 30% from July through November 2023 through successive cuts—300 basis points to 25% in July 2025, followed by reductions to 21.5% in September and 18% in November. Driven by sustained disinflation and fiscal consolidation, the policy shift reflects growing confidence in Ghana’s macroeconomic stabilization.



For businesses, the easing cycle promises lower borrowing costs, improved cash flow, and expanded investment opportunities, although the impact will depend on effective transmission through commercial banks and firms’ creditworthiness.
The MPR serves as the cornerstone of Ghana's inflation-targeting framework, established under the Bank of Ghana Act (2002, as amended). As outlined in the BoG's Monetary Policy Reports from March 2017 to November 2025, the rate anchors short-term interest rates and influences lending conditions to maintain inflation within the 8% ±2% medium-term band. When the BoG raises the MPR, it tightens liquidity to curb inflation; conversely, cuts inject stimulus by making credit cheaper.

Today's 250 bps move reflects continued disinflation momentum, with headline inflation plunging from 54.1% at end-2022 to 23.8% in December 2024 to 5.4% in December 2025, per the BoG's January 27 Summary of Economic and Financial Data. The cedi's appreciation (trading around GHS 10.50 per USD), fiscal consolidation, and anchored expectations have created room for stimulus without derailing the 8% ±2% medium-term target and improved banking sector health have given the MPC room to ease without risking price stability. The decision builds on the easing cycle that accelerated in late 2025: a 300-bps reduction to 25% in July, followed by cuts to 21.5% in September and 18% in November (a 350-bps cumulative drop from September).


For Ghanaian businesses, the primary boon and this cumulative easing of over 1,450 bps from the 2023 high of 30% represents a transformative shift from high-cost survival mode to growth-oriented financing via lowered borrowing costs. Commercial banks reference the MPR when setting rates, adding margins based on factors like Treasury bill yields, funding costs, and borrower risk often evaluated through the "Five Cs" (character, capacity, capital, collateral, and conditions).

The Average Lending Rate (ALR), which captures average cost of bank credit to borrowers has already fallen from 30.75% in January 2025 to 27% in June, a 375-bps drop, per BoG data. With the MPR now at 15.50%, analysts expect the ALR to compress further toward 17-20% by mid-2026, assuming banks pass through the savings. This could slash the cost of overdrafts, working capital loans, and project financing. For instance, a manufacturing firm borrowing GHS 1 million at 27% might pay GHS 270,000 annually in interest; at 20%, that drops to GHS 200,000, freeing up GHS 70,000 for reinvestment or debt reduction.


Real-economy sectors stand to benefit most as sector-specific impacts highlight the policy's potential to address longstanding structural issues. A 2025 study in the Forum for Social Economics reveals that bank credit to agriculture and manufacturing has declined persistently from 1999 to 2023, repressed by high rates under the inflation-targeting regime, forcing small and medium enterprises (SMEs) into survival mode.

Agriculture, which employs over 40% of Ghanaians, received just 4-6% of total credit in recent years, stifling value addition in crops like cassava. Lower rates could reverse this: an agribusiness like Bubuva Agro Ltd which is into commercial rice production in the Volta Region might now afford a GHS 500,000 processing unit loan at reduced interest, shortening the payback period from 5-7 years to 3-4 years and enabling exports under the African Continental Free Trade Area (AfCFTA).

Similarly, manufacturers hit by non-performing loans (NPLs) rising to 19.5% in October 2025 (from 26.7% in Mar 2024 and a record low of 6.1% in September 2007) could refinance equipment, boosting productivity and innovation. The BoG's July 2025 report notes that private sector credit growth, stagnant at 5-7% annually post-2022 crisis, could accelerate to 10-12% with easing, supporting job creation in these real economy sectors.

This manifested as the private sector credit expanded by GH¢12.072 billion (13.9%) in the year to October 2025, although reflecting a moderation from the GH¢19.435 billion (28.8%) growth recorded a year earlier with the private sector’s share of total outstanding credit remained dominant, rising to 95.9% up from 91.9% in October 2024.

The BoG's 2025 credit-reference bureau expansions (Dun & Bradstreet, MyCredit Score, XDS Data) will further sharpen risk assessment by providing verified credit histories, potentially shaving 100-200 bps off premiums for creditworthy borrowers. Broader ripple effects extend to cash flow and investment. Lower rates discourage excessive saving, spurring consumer demand and business expansion. High rates previously forced businesses into "survival mode," prioritizing short-term trades over long-term production. Firms can renegotiate existing debt, prioritize medium-term projects, and hedge residual currency risks amid the cedi's strength.

For SMEs, which constitute 85% of Ghanaian enterprises, this means easier access to inventory loans and reduced debt service burdens on existing facilities. However, transmission lags persist; banks' funding costs and elevated deposit rates, NPL provisions (still elevated post-2022 crisis), and risk buffers may delay full pass-through.

The policy's success also hinges on complementary factors. Businesses should proactively strengthen profiles through disclosures and collateral to maximize gains. Also, currency volatility, with the cedi's appreciation masking global risks like tariff disputes, necessitates hedging strategies. Fiscal deficits, at 1.4% of GDP (from 9.7% of GDP in 2022), must remain contained to avoid crowding out private credit. Businesses should capitalize by renegotiating loans potentially saving 3-5% on rates and prioritizing investments with medium-term returns, such as tech upgrades for efficiency.

Strengthening credit profiles through better financial disclosures and collateral will unlock advantages from the new rating regime. Diversifying revenue streams, perhaps via AfCFTA exports, can mitigate exchange rate risks amid declining T-bill yields (from 36.72% in 2022% to 13.06% in 2025).


In conclusion, this cut signals the BoG's shift toward growth facilitation, aligning with earlier call by experts for easing from 18% amid low inflation. In essence, the BoG's MPR reductions from 18% to 15.50% represent a vote of confidence in Ghana's recovery, poised to lower financing barriers and spur growth. As the economy stabilizes, evidenced in the January 27 Summary of Economic and Financial Data release, proactive firms that reassess financing (debts) with maximum gains, invest strategically, and hedge risk by diversifying can convert lower rates into sustainable expansion.

Yet, without vigilant monitoring of transmission and external shocks, the easing could falter. For Ghana's entrepreneurs, today’s cut is not just a rate cut; it more than a relief. It is a policy shift from crisis management to private-sector stimulus. It's a powerful catalyst for transforming survival into and broader economic recovery and sustainable prosperity in agriculture, manufacturing, and all other business activities of the country.

The Writer: Julius Karl D. Fieve is an innovative Gender and Development Finance Expert over 12 years of experience driving impactful initiatives across Africa. He is also a rice farmer, cultivating over 200 acres of rice in the Central Tongu District of the Volta Region. Julius holds master’s degrees-an MSc in Africa and International Development from the University of Edinburgh, UK, an MSc in Economics and BSc. Actuarial Science, both from the Kwame Nkrumah University of Science and Technology (KNUST).