The Bank of Ghana has lowered its benchmark rate by 350 basis points to 18 percent, the third successive cut, as inflation tumbles and economic conditions ease.
Governor Johnson Asiama, speaking in Accra, said the decision reflected improved real interest rate conditions and a sustained outlook for stable inflation through mid-2026. The governor explained that elevated real rates created enough room to ease monetary policy in order to support growth recovery. The central bank projects inflation to remain near its target band well into the first half of 2026.
Ghana’s recent inflation trajectory has been dramatic. After peaking at over 54 percent in December 2022 — the highest in two decades — consumer price inflation fell sharply, returning to the BoG’s 6–10 percent target range by September this year. By October, inflation had dropped to 8 percent, the lowest in more than four years.
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Key factors behind the decline include improved fiscal discipline and a rally in global gold prices. As the continent’s largest gold producer, Ghana benefited from surging commodity prices; the resulting strengthening of the cedi — up roughly 30 percent against the U.S. dollar this year — helped lower import costs and ease inflationary pressures.
Ghana’s government, through Finance Minister Cassiel Ato Forson, has pledged continued fiscal consolidation as the country prepares to exit its programme with the International Monetary Fund (IMF). The budget projection targets a primary surplus of 1.5 percent of GDP by 2026, with the overall fiscal deficit expected to narrow from a projected 2.8 percent in 2025 to 2.2 percent in 2026.
Forson also forecasts economic growth of at least 4.8 percent in 2026, up from an estimated 4 percent for the current year. Data from national sources show food inflation dropped sharply to 9.5 percent in October from 11.8 percent in September, supported by harvest season supply and favorable base effects.
In contrast to Ghana’s aggressive easing, Nigeria’s central bank opted to hold its benchmark rate steady at 27 percent even as inflation has come down markedly. As of October 2025, headline inflation in Nigeria stood at 16.05 percent, nearly a full percentage point lower than the previous reading. The decision to maintain the Monetary Policy Rate (MPR) was announced by CBN Governor Olayemi Cardoso following the bank’s latest Monetary Policy Committee meeting.
While many had expected at least a modest cut, given inflation’s steady decline, the CBN resisted. Officials argued that despite the recent disinflation, double-digit inflation remains too high to warrant a rate cut. Instead, the central bank adjusted the interest-rate corridor around the MPR, narrowing it to plus 50 / minus 450 basis points, and kept other tools such as the Cash Reserve Ratio and liquidity ratio unchanged. The adjustment is widely interpreted as an effort to encourage banks to lend rather than hoard deposits, hinting at cautious optimism about liquidity conditions and future stability.
Nigeria’s measured approach reflects concern that inflation remains elevated and underlying price pressures persist. While lower inflation is recognized, policymakers appear to prefer waiting for a sustained trend, especially in food and core inflation, before loosening monetary policy further.
The diverging strategies between Ghana and Nigeria highlight contrasting assessments. For instance, Ghana, benefiting from strong external tailwinds, improved currency strength, and a steep inflation reversal, feels confident enough to ease rates aggressively. Nigeria, on the other hand, appears more cautious despite disinflation to 16 percent. The central bank appears unwilling to loosen against a backdrop of still-high inflation and structural uncertainties.
The apex bank seems committed to ensuring that the disinflation path is durable before reducing borrowing costs, even if that means foregoing some short-term economic boost.
However, analysts have noted that if Nigeria’s inflation fails to moderate significantly, the decision to hold could preserve macro stability — but also risk keeping borrowing costs high just as economy-wide costs remain steep.