Ghana Central Bank Surprises Markets with Larger-Than-Expected Rate Cut

The Bank of Ghana has delivered another larger-than-expected interest rate cut, signaling a continued shift toward monetary easing as inflation shows signs of slowing.

In a move that surprised analysts, the central bank  lowered its benchmark lending rate by 350 basis points to 21.5%, Governor Johnson Asiama told reporters on Wednesday in the capital, Accra.   This marks the second consecutive outsized cut as policymakers look to support economic growth amid improving inflation dynamics and a stabilizing currency.

The central bank cited declining inflation and easing cost pressures as key factors behind the decision. Ghana’s annual inflation rate has been steadily falling in recent months, following a peak in 2022 that triggered one of the most aggressive tightening cycles in the country’s history.

Market reaction was mixed, with some investors welcoming the move as a boost to economic activity, while others expressed caution over the potential impact on the cedi and longer-term inflation expectations.

The central bank indicated it would continue to monitor macroeconomic developments closely and adjust its policy stance as needed to maintain price stability and support recovery efforts.