Economy

MPC to cut policy rate to 12.5%

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The Monetary Policy Committee (MPC) may cut the policy rate by 150 basis points to 12.5% in September 2026.

According to Databank Research, this would be consistent with the continued correction in inflation towards the Bank of Ghana’s medium-term target band of 8% ± 2%.

"The transmission of this policy stance should translate into softer money-market and lending rates, with an average compression of about 75bps, while supporting a decline in the Ghana Reference Rate (GRR) towards 9.9%. We expect this to encourage a cautious recovery in credit extension by banks, as lower domestic funding costs provide some relief to borrowers".

For the government, it explained that the soft cut should support a gradual reduction in domestic financing costs, improve market sentiment, and create a more favourable environment for the issuance of longer-dated Treasury bonds as investor confidence gradually strengthens.

Inflation reaccelerated to 5.3% in June 2026 from 3.8% in January 2026, reflecting renewed price pressures from energy and imported inputs, even as monthly inflation remained relatively contained.

Databank Research said easier financial conditions have supported credit transmission, with private sector credit growth rising to 41.2% year-on-year in nominal terms and 34.1% in real terms, while the banking sector’s industry-wide Capital Adequacy Ratio (CAR) stood at 20.4% and the gross NPL ratio improved to 16.1%.

This underscores solid capital buffers and gradually improving asset quality.

The Monetary Policy Committee (MPC) of the Bank of Ghana in July 2026 kept its policy rate unchanged at 14%.

It expressed concerns about rising global prices and transport cost and renewed conflict in the Middle East.

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DISCLAIMER: The Views, Comments, Opinions, Contributions and Statements made by Readers and Contributors on this platform do not necessarily represent the views or policy of Multimedia Group Limited.