From 54% inflation to record rate cuts, Ghana’s economic comeback seems unstoppable

This move follows the ironic contemplation of how further interest rate cuts would affect the country, as Ghana’s economic recovery exceeds expectations.

On Wednesday, the governor of the Bank of Ghana, Johnson Asiama, told reporters that the majority of the monetary policy committee agreed to lower the key rate to 18%, a decrease of 350 basis points.

“The prevailing high real interest rates provided some scope to ease monetary policy to further boost the growth recovery efforts,” the governor said.

“The bank projects a continued stable inflation profile around the target and well into the first half of 2026.”

Ghana’s economic recovery over the last few years has been admirable to say the least.

From an inflation which now sits at a single digit, after peaking at 54% in December 2022, to a currency which went from being the worst performing globally, to the best performing in the space of a year, Ghana has experienced an unprecedented economic resurgence.

The West African country, popularly known as the Gold Coast, has profited from an increase in the gold’s price and a better fiscal outlook, which has helped the cedi gain around 30% against the US dollar this year, as seen on Bloomberg.

As recently reported, Ghana’s central bank revealed the country’s inflation rate had declined faster than expected; as a result, real borrowing costs have stayed high, unwittingly harming the economy.

Following its previous record-setting rate alteration, the central bank was looking at the nuances of lowering interest rates any further.

In September, the bank’s Monetary Policy Committee (MPC) reduced the main interest rate by a record 350 basis points to 21.5%.

At the time, Ghana’s inflation had fallen from 11.5% in August to 9.4% in September.

The rate cut came three months ahead of schedule, since the country had forecast a single-digit inflation rate by the end of the year.

This rapid recovery appears to have stunned the financial sector, as the Governor of the Central Bank recently revealed during his introductory remarks at the rate-setting Monetary Policy Committee (MPC) meeting that aligning interest rate reductions with inflation rates presents a significant challenge.

In the past two sessions, the Bank of Ghana has lowered its policy rate as inflation has decreased from crisis levels.