The Bank of Ghana’s Monetary Policy Committee (MPC) meets over three days, this week, from Monday, November 24 to Wednesday, November 26, with markets and businesses broadly expecting another significant easing of the benchmark Monetary Policy Rate (MPR) after months of rapid disinflation.
The MPR is the rate at which the central bank lends to commercial banks in its role as lender of last resort to smoothen their short term liquidity shortfalls and it thus serves as an indicative rate guiding interest rates across the financial markets
After an aggressive easing cycle during the third quarter of this year — the MPC cut the MPR by 300 basis points in July and then further by a record 350 basis points in September to 21.5% — economists, research houses and treasury desks are braced for a further step down. Central bank Governor, Dr Johnson Asiama has repeatedly pointed to improving macroeconomic indicators and anchored inflation expectations as the rationale for easing during the two consecutive rate cuts earlier this year.
Financial research houses are split on quantum but have a consensus on direction. IC Research says stronger disinflation and cedi appreciation give scope for a deep reduction — it has modelled an aggressive 400 basis-point cut to around 17.5%. Other local forecasters, including Databank and United Capital, urge a more cautious approach but also expect a cut in the 200–300 basis-point range.
Banks and lenders are braced for pronounced interest rate margin pressure if the MPC delivers another large cut. Fitch Ratings has warned that sequential rate reductions this year will squeeze bank net interest margins and profitability, a concern echoed by local bank chiefs at industry engagements with the governor. Many banks are, however, publicly supportive of lower policy rates to revive credit to the real economy if the disinflation path holds.
Borrowers and manufacturers — especially small and medium-sized firms that have faced tight credit conditions for much of the past two years — are among the most vocal proponents of faster easing. “Lower MPRs will finally translate into cheaper working capital and investment loans, vital for manufacturing recovery,” said a senior executive at a leading Accra-based food processor. Exporters and commodity producers are more mixed; while lower domestic rates reduce financing costs, exporters caution that a sharply stronger cedi could hurt competitiveness and indeed have been pressing government for targeted measures to dampen exchange-rate swings.
Portfolio investors and the fixed-income market are watching the MPC closely for guidance on the likely path for government securities yields and liquidity. Yields have come down in recent months as the central bank signaled a dovish stance and many foreign portfolio managers tell clients they expect another cut but will watch the size closely before repositioning.
“A calibrated cut of 200–300bps would be consistent with the recovery narrative and should bring further yield compression,” a fixed-income strategist at a regional fund said, his views reflecting wider sentiment among many financial market operators.
Government’s Finance Minister Dr Cassiel Ato Forson has highlighted fiscal consolidation and exchange-rate stability as complements to monetary easing, telling investors this month that fiscal discipline has helped create room for policy normalisation. That partnership — between tighter fiscal policy and a now (cautiously) dovish central bank — is central to expectations that the MPC will act to significantly cut interest rates further.
Weighing official comments, research-house forecasts and market pricing, financial commentators suspect the most likely outcome is a cut of 250–300 basis points, taking the MPR into the 18.5–19.0% range. A 400bps move to below 18% remains an unlikely but possible scenario though if the central bank’s forecasts for November inflation point to another sharp drop and the cedi’s exchange rate remains firm. Any decision will hinge largely on the committee’s risk assessment of possible impending food and utility-price shocks and the government’s ongoing fiscal trajectory.
The MPC will deliver its decision and hold a press conference on Wednesday, November 26. Markets will read both the number and the Governor’s statement – he doubles as the Chairman of the MPC – closely for forward guidance on how fast the easing cycle can continue into 2026.
