- GAB hopes for a policy rate cut as the BoG's MPC meets
- Stable markets, steady currency, and slowing food prices may influence the decision
- A rate cut could reduce borrowing costs for businesses and consumers
The Ghana Association of Banks (GAB) is hopeful that the Bank of Ghana (BoG) will reduce the monetary policy rate as the BoG’s Monetary Policy Committee begins its 123rd meeting today, Monday, March 24, 2025.
With the current policy rate set at 27% and inflation easing to 23.1% in February, GAB President Kwamina Asomaning sees a strong argument for a potential rate cut.
Speaking to the media during the Association’s 2025 Cocktail and Networking Session, he highlighted factors such as stable market conditions, a steady local currency, and a slowdown in food price increases, which could influence the BoG’s decision.
“As the policy rate generally follows inflation, and with inflation hovering around 23%, the pace of disinflation has been slower in recent months compared to previous expectations. Market analysts are waiting to see if inflation expectations have fallen enough for the BoG to act,” Asomaning explained.
He added, “We’ve observed that the currency has stabilized, and while food price increases are not fully behind us, there’s been a noticeable slowdown in the rise of food prices. If policymakers feel confident that inflation expectations have moderated, we believe there’s a solid case for a rate reduction. Since the policy rate impacts interest rates, failing to reduce it would leave borrowing costs high, which the economy cannot afford right now. We remain hopeful.”
A reduction in the policy rate would lower interest rates across the economy, providing relief to businesses and consumers burdened by high borrowing costs.
The 123rd MPC meeting, the first under new Governor Dr. Johnson Asiama, will take place from March 24 to March 26, 2025, to review key economic trends. The meeting will wrap up with a press conference on Friday, March 28, 2025, where the committee will reveal its decision. Analysts are closely monitoring whether inflation expectations have decreased enough for the BoG to make an adjustment.
This development comes amid a continued decline in Treasury Bill rates, alongside an improving economic environment, further strengthening the argument for a policy rate cut.
