The Monetary Policy Rate is now 14.0%. The Bank of Ghana's 129th MPC meeting, held March 16-18, cut the rate by 150 basis points from 15.5%, marking the second reduction this year and pulling the benchmark to its lowest level since late 2022.
The vote was not unanimous. Three members backed the full 150-basis-point cut. One preferred a smaller reduction. One wanted rates held entirely.
The numbers that forced the decision
Inflation at 3.3% against a policy rate of 15.5% produced a real policy rate of 12.2 percentage points. That spread was doing visible damage. Credit growth to the private sector remained weak. Business lending rates stayed elevated well above what most firms could absorb. The majority on the committee concluded that maintaining such a wide gap between the nominal rate and actual price changes was actively suppressing credit formation, fixed investment, and the broader recovery.
This is the second cut in quick succession. In January, the MPC brought the rate down from 18% to 15.5%, a 250-basis-point move that signalled a clear shift in BoG's posture. The cumulative reduction since January now stands at 400 basis points.
What the dissenters were watching
The member who voted to hold rates likely had one eye on the cedi. Exchange rate volatility has not disappeared, and imported inflation can re-emerge quickly if the currency weakens sharply. The member who preferred a smaller cut may have wanted to preserve more room to act later in the year without appearing to rush.
These are reasonable positions. But the majority's argument carried weight: with inflation at 3.3% and the economy still recovering from the debt restructuring period, a real rate above 12% was difficult to justify on any standard monetary policy framework.
What this means for borrowing costs
Commercial banks do not pass rate cuts through immediately or fully. The benchmark is down 400 basis points since January, but average lending rates have moved by far less. The gap between the policy rate and what businesses actually pay remains wide. BoG has signalled it wants transmission to improve, but the banking sector's own risk pricing and liquidity preferences have been slow to adjust.
Treasury bill rates have already started falling, which should gradually pull down the yield curve and reduce the government's own borrowing costs. For firms and households, the effect will be slower.
The path from here
The MPC meets again in May. If inflation holds below 5% and the cedi remains within a manageable band, the committee will face pressure to cut again. But the split vote suggests the easy consensus is behind them. Each further reduction will face tighter scrutiny from the minority members who already see the pace as too fast.
The rate is 14%. The question now is whether the economy feels it.
