Market News

By Philip Shimnom Clement and Peter Moses, Lagos 

The Bank of Ghana has announced a reduction in its benchmark interest rate, by 350 basis points to 18%, 

The decision marks the third consecutive cut, as inflation continues its rapid decline and economic conditions improve.

Governor of the Bank of Ghana, Johnson Asiama, speaking in Accra on Wednesday, said the Monetary Policy Committee (MPC) voted overwhelmingly in favour of easing rates, citing stronger real interest rate conditions and confidence in the country’s inflation outlook.

“The prevailing high real interest rates provided some scope to ease monetary policy to further boost the growth recovery efforts,” the governor said.

“The prevailing high real interest rates provided some scope to ease monetary policy to further boost the growth recovery efforts,” the governor said.

“The bank projects a continued stable inflation profile around the target and well into the first half of 2026,” he added.

Ghana’s inflation story marks one of the fastest reversals on the continent. After peaking at over 54% in December 2022, its highest in two decades, inflation fell back into the Bank of Ghana’s target range of 6–10% by September this year. It continued to decline further in October, reaching a more-than-four-year low of 8%.

The decision by the apex bank of Ghana came a day after Nigeria’s apex bank retained its interest rate at 27% amidst mixed reactions from some stakeholders who had predicted a reduction due to the drop in inflation.

Meanwhile, a member of Daily Trust Board of Economists, Aliyu Ahmed while reacting to the recent interest rates cut by the central bank of Nigeria stated that holding the MPR at 27% was the right call by the MPC.

“Coming barely 12 weeks after the last reduction of MPR following sustained rise in the past meetings, it is not expected that MPC would do anything different at this meeting with respect to MPR, especially in view of the continuing inflation deceleration.

 “It is good practice to see how the effect of the last cut will impact the macro-fiscal, especially in light of the fact that the impact of any raise or cut comes with a lag. What is yet to be seen is that in spite of the public show of collaboration between fiscal and monetary authorities, as depicted in a recent meeting between CME/Hon Minister of Finance and Minister of Budget and National Planning on one side and the Governor of CBN on the other, excess liquidity from the fiscal continue to exert considerable pressure on the macroeconomy.,” he said

 …Cut interest rates to reduce borrowing cost, MAN tells CBN

In a related development, the Manufacturers Association of Nigeria (MAN) has called on the Central Bank of Nigeria to further reduce interest rates in order to reduce the cost of borrowing.

MAN said this while responding to the outcome of the Monetary Policy Committee meeting held on November 24 and 25, where the MPC retained the Monetary Policy Rate at 27 per cent.

The Director-General of MAN, Segun Ajayi-Kadir, in a statement, said manufacturers had expected a further easing to reduce borrowing costs, which currently range between 30 and 37 per cent.

Ajayi-Kadir said the association “appreciates the decision of the MPC to halt the increase in MPR” but insisted that manufacturers had expected “a further reduction in the rate to reduce the cost of borrowing.”

He added, “The rate hinders production and reduces the competitiveness of the sector. 

“While the emphasis on exchange rate stability and improved forex liquidity is crucial, it is essential to reduce the cost of funds to encourage borrowing for expansion and investment.” 

The association warned that persistently high interest rates would continue to limit access to affordable credit, especially for small and medium-scale manufacturers. 

It added that the situation was worsened by structural challenges, including poor infrastructure, high logistics expenses, erratic power supply, soaring energy costs and insecurity, all of which escalated production costs. 

MAN urged the CBN and the fiscal authorities to strengthen policy coordination and deepen reforms that unlock industrial potential, stressing the need for a “downward review of the rate in subsequent MPC meetings to lessen the burden of high borrowing costs and incentivise long-term investments,” particularly in capital-intensive sub-sectors. 

The group also recommended the introduction of additional monetary instruments to facilitate credit flow to the real sector, alongside increased government investment in infrastructure to boost supply capacity. 

On exchange rate management, MAN urged the government to work closely with the CBN to stabilise the naira and manage potential risks linked to capital flight arising from the new MPC corridor adjustment “that will push banks to lend more.” 

It also called for complementary fiscal measures that support industrial development, promote structural reforms in agriculture, manufacturing and energy, and address inflationary pressures.