The Bank of Ghana's (BoG) Monetary Policy Committee has reduced the monetary policy rate from 28 percent to 25 percent.

At a press conference held on Wednesday, July 30, the Governor of the Bank of Ghana, Dr Johnson Asiama, said, "the Committee, by a majority decision, voted to lower the Monetary Policy Rate by 300 basis points to 25.0 percent. Looking ahead, the Committee will continue to assess incoming data and likely reduce the policy rate further, should the disinflation trend continue. The Committee remains committed to the price stability mandate, while creating conditions for inclusive and sustainable growth."

Since the last MPC meeting, the Monetary Policy Committee revealed that headline inflation has declined further to 13.7 percent in June 2025 from 18.4 percent in May, the lowest reading since December 2021.

"The deceleration was underpinned by the tight monetary policy stance, fiscal consolidation, easing food supply constraints, as well as the strong recovery of the cedi. In line with the easing underlying inflation pressures, the Bank’s main core inflation measure, which excludes energy and utility items, has declined markedly. Similarly, inflation expectations by banks, consumers, and businesses are broadly anchored," the Governor explained.

He further revealed that "growth in monetary aggregates remained subdued during the first half of the year, primarily due to the tight monetary policy stance, strong liquidity management, and reduced government borrowing."

"In line with the disinflation process and easing inflation expectations, interest rates at the short end of the money market have declined sharply, and in turn, reduced the cost of government borrowing," the BoG Governor added.

According to Dr Asiama, data on budget execution indicated a strong commitment to fiscal consolidation as expenditures adjusted within set targets to accommodate the revenue shortfalls during the first half of 2025.

As a result, the overall fiscal deficit on commitment basis was 0.7 percent of GDP, outperforming the budget target of 1.8 percent of GDP.

"The external sector has improved markedly, with a record current account surplus of US$3.4 billion in the first half of 2025, supported mainly by higher prices and increased production volumes of gold and cocoa. The current account surplus, together with the outturns in the capital and financial accounts, culminated in an overall balance of payment surplus of US$2.2 billion, significantly higher than the US$588.5 million recorded in June 2024. On this score, Gross International Reserves stood at US$11.1 billion at end-June 2025, equivalent to 4.8 months of import of goods and services, compared to US$8.9 billion (4.0 months of import cover) as at end-December 2024," he added.

Overall, the Committee noted that macroeconomic conditions have significantly improved, "inflation expectations are broadly anchored, external buffers have strengthened, and confidence in the economy is returning."

The Bank of Ghana’s Monetary Policy Committee (MPC) on July 21 commenced its 125th regular meeting to review the measures put in place to ensure the country’s economic growth.

At the 124th Monetary Policy Committee (MPC) meetings held from 21 to 23 May 2025, the Committee, by a unanimous decision, maintained the Monetary Policy Rate (MPR) at 28.0 percent to check the country’s inflation rate. In addition to the policy rate decision, the Bank also announced an amendment to the Dynamic Cash Reserve Ratio (CRR), with effect from 5 June 2025.

With the amendment, all banks will be required to maintain the CRR in their respective currencies. This means foreign currency reserves for foreign currency deposits and domestic currency reserves for domestic currency deposits.

The Committee revealed that global economic developments in the first four months of the year were characterised by low growth prospects, unsynchronised disinflation outcomes, and restrictive global financial conditions.

On the domestic front, the Bank’s high-frequency real sector indicators point to a sustained pickup in economic activity. The updated Composite Index of Economic Activity increased by 2.3 percent year-on-year in March 2025, compared with 1.0 percent over the same period last year.

Headline inflation has declined consecutively and stands at 13.7 percent as of June 2025. The external sector has continued to improve, with a record provisional current account surplus of US$2.1

billion in the first quarter of 2025. Gross International Reserves (GIR) amounted to US$10.7 billion in April 2025, equivalent to 4.7 months of import of goods and services.

The cedi has rebounded strongly against the major trading currencies. The cedi has recorded a remarkable turnaround in the first six months of 2025, appreciating by 42.6% against the US dollar. The cedi also appreciated by 30.3% against the British pound and 25.6% against the euro during the same period.

Ahead of today’s meeting, the International Monetary Fund (IMF) has entreated the central bank to maintain a tight monetary policy stance to stabilize the gains chalked up in reducing inflation.

Speaking at a press briefing in Washington, IMF Communications Director Julie Kozack said, “Going forward, it will be important for monetary policy to remain sufficiently tight, consistent with bringing inflation down to the Bank of Ghana’s target range of 8 percent, plus or minus 2 percentage points.”

“Ghana has made good progress since the beginning of the program in reducing inflation. Inflation was extremely high at the end of 2022 at 54%. It has now come down substantially to 14% at the end of June 2025,” Kozack added.

Macroeconomic performance in first half of 2025

The government’s macroeconomic targets for the year 2025 are as follows: overall real Gross Domestic Product (GDP) growth of at least 4.0%, non-oil real GDP growth of at least 4.8%, end-year inflation rate of 11.9%, primary balance on commitment basis at a surplus of 1.5% of GDP, and gross International Reserves covering not less than three months of imports.Presenting the 2025 mid-year budget review on the floor of Parliament on Thursday, July 24, the Minister for Finance, Dr Cassiel Ato Forson, indicated that the first half of 2025 has demonstrated the government’s commitment to economic recovery.

He noted that through prudent fiscal management, sound monetary policy, effective structural reforms and strategic investments, the government is laying a solid foundation for sustainable growth and shared prosperity.

In the first quarter of 2025, the economy expanded by 5.3%, up from 4.9% in the same period of 2024, marking the highest first-quarter growth since 2020. The agriculture sector led this growth with a remarkable 6.6% increase, about three times the growth in first quarter of 2024. The agriculture sector growth contributed 26.4% of the overall first quarter growth. The fishing sub-sector grew the most at 16.4%. The services sector, constituting the largest share of the economy at 46.8%, grew by 5.9% and contributed 47.9% to the overall first quarter growth, with Information and Communication Technology (ICT) leading the growth in the sector at 13.1%.

Industry grew by 3.4% in the first quarter of 2025, contributing 20.6% to the overall first quarter growth.

Manufacturing also posted an impressive growth of 6.6%. Non-oil GDP growth also picked up strongly, growing at 6.8% in the first quarter of 2025 compared to the growth rate of 4.3% in the same period in 2024.

The non-oil GDP growth is the highest since 2018. It is expected that with the introduction of the 24-Hour Economy Policy, the Big Push Programme and the Agriculture for Economic Transformation Programme, the GDP growth will be sustained and possibly exceed the targeted rate of 4% for 2025.

Inflationary pressures have eased significantly, and according to the Finance Minister, the drastic fall in inflation “is not by chance or sheer luck but as a result of hard work and deliberate policies.”

He revealed consumer price inflation has reduced from 23.8% in December 2024 to 13.7% in June 2025, representing a 10.1 percentage point decline. Similarly, producer price inflation saw a sharp decline from

26.1% in December 2024 to 5.9% in June 2025, representing a steep decline of 20.2 percentage points in six months.

Food inflation declined from 27.8% in December 2024 to 16.3 percent in June 2025, representing an encouraging 11.5 percentage point reduction. Non-Food inflation also declined from 20.3% in December 2024 to 11.4% in June 2025, representing an 8.9 percentage point reduction.

Inflation for locally produced goods and services declined from 26.4% in December 2024 to 14% in June 2025. Inflation for imported items decreased from 18.0% in December 2024 to 12.5% in June 2025.

The minister remarked that “these improvements are reflective of the effective fiscal consolidation, tight monetary policy, strong central bank reserves and the appreciation of the cedi. Mr. Speaker, with this trend, we are focused and determined to achieve our end-December 2025 inflation target of 11.9% ahead of schedule.”