Ghana’s inflation slowed to a four year low of 5.4% in December 2025, strengthening expectations that the central bank will begin easing borrowing costs as the country consolidates its recovery from a debt crisis.
The latest data from the Ghana Statistical Service caps a sharp disinflation cycle that began at the start of 2025, when consumer price growth stood above 25%. Inflation fell steadily through the year, dropping from 25.2% and 23.5% in January to single digits by year end, reflecting tighter fiscal policy, exchange rate stability and easing external pressures.
“The outlook looks positive. We have achieved macroeconomic stability,” said Dr. Adu Owusu-Sarkodie, an economist, senior lecturer at the University of Ghana and executive director of the Centre for Policy Scrutiny, in an interview on TV3’s Ghana Tonight. He attributed the turnaround to Ghana’s domestic debt exchange program and its International Monetary Fund-supported reform agenda.
Dr. Owusu-Sarkodie said foreign exchange and gold reserves have improved, giving the Bank of Ghana room to manage currency volatility if the need be. He added that supportive global conditions, including strong gold and cocoa prices and lower crude oil prices, have reinforced the disinflation trend by easing import costs and reducing fuel prices.
The drop in inflation increases pressure on the Bank of Ghana to cut its benchmark policy rate, which currently stands at about 18%. Dr. Owusu-Sarkodie said the rate is expected to fall below 15% during 2026 if the deflation trend holds, although he cautioned that single-digit interest rates are more likely over the medium term rather than within the next year.
Lower rates would reduce financing costs for businesses still recovering from Ghana’s debt crisis and could encourage new investment, particularly in sectors sensitive to credit conditions. “It creates a good environment for businesses. People can borrow at a lower cost and expand,” he said.
The central bank operates an inflation-targeting framework, and sustained single-digit inflation would mark a significant milestone after years of elevated price pressures driven by currency depreciation, fiscal slippages, and global shocks.
Dr. Owusu-Sarkodie warned that maintaining fiscal discipline will be critical to preserving the gains, noting that weak budget controls could force monetary authorities to tighten policy again, undermining confidence and slowing growth.
For now, Ghana enters 2026 with inflation under control, a stable currency, and improving macroeconomic indicators, offering policymakers a rare window to shift focus from crisis management to longer-term economic transformation.
