The Bank of Ghana (BoG) says its recent policy rate cut is expected to ease the cost of credit and bring down lending rates in the country from October 2025.
Director of Research at the Central Bank, Dr. Philip Abradu-Otoo, explained that the decision will first reduce borrowing costs for commercial banks before translating into lower rates for businesses and individuals.
Speaking on PM Express Business Edition with George Wiafe on September 18, Dr. Abradu-Otoo said: “At the July Monetary Policy Committee Meeting, when the Bank of Ghana cut the policy rate by 300 basis points, we saw a corresponding 2.5% cut in interest rates. There is the likelihood that this time round we could see some significant cuts in the lending rates of commercial banks in the country.”
Policy Rate Cut and Inflation Concerns
The Monetary Policy Committee (MPC) reduced the policy rate by 300 basis points to 21.5 percent. Some analysts, however, have warned that the move could undermine progress made in taming inflation.
Dr. Abradu-Otoo defended the decision, stressing that it was based on sound economic data. “Our international reserves are strong enough to support the local currency and finance imports, while growth is picking up strongly. All this gives us comfort to lower the rate,” he said.
He added that inflation is expected to remain within the single-digit range despite the rate cut, while credit to key sectors of the economy should see improvement.
Non-Performing Loans
Latest data from the Central Bank shows that non-performing loans (NPLs) have eased to 20.8 percent, down from 24.8 percent.
While some industry players believe the ratio remains too high and could weigh on credit delivery, Dr. Abradu-Otoo said corrective measures are underway.
“We don’t think that the NPLs will be that bad or remain that high in the coming months based on some measures that the Bank of Ghana has undertaken,” he noted, adding that efforts are being made to improve lending to businesses.
Source: Joy Business
