The Bank of Ghana’s Monetary Policy Committee (MPC) has begun its three-day meeting amid renewed calls from industry leaders for a cut in the policy rate to ease borrowing costs and stimulate growth.
Currently at 25 percent, the policy rate was reduced by 300 basis points in July after inflation eased to its lowest level in nearly three years. That bold cut gave businesses hope, but with credit still expensive, they are pushing for more relief.
The Greater Accra Regional Chairman of the Association of Ghana Industries (AGI), Tsonam Akpelo, urged the central bank to be sensitive to the needs of local businesses.
“If the interest rate is high, it is almost difficult to buy the money and expand our business. So our hope is that government will be sensitive to all of these concerns and continue to reduce the policy rate,” Akpelo said.
He stressed that cheaper credit is vital for industrial growth, job creation, and Ghana’s post-crisis recovery momentum.
“Cheaper credits will allow industries to expand, create more jobs and drive Ghana’s recovery momentum,” he added.
Akpelo also linked the rate cut to the government’s flagship 24-hour economy policy, which aims to expand industrial activity and absorb unemployed youth.
“For us to do that, we need cheaper rates. We want to go to the bank and be able to borrow money at a rate that is competitive,” he said.
While industry players push for lower rates, economists warn that the central bank must strike a delicate balance to prevent inflationary risks.
Economist Dr. Edu Owusu-Sarkodie agreed that a cut is necessary but cautioned against excessive adjustments.
“The cedi is depreciating, which is likely going to feed into inflation, and also we are now talking about some utility tariff adjustments,” he explained.
According to Dr. Owusu-Sarkodie, the MPC may approve a moderate cut, possibly between 150 to 200 basis points to bring the rate to around 23 or 23.5 percent.
“I’ve heard some people call for 500 basis points, but I don’t think it will be that much. They will also have to be careful not to cut it so drastically,” he noted.
The MPC faces a tough task, easing borrowing costs to drive investment and growth while ensuring inflation remains stable and the currency does not come under further pressure.
The July cut gave industries a boost, but business leaders argue that without further reductions, Ghana’s recovery will slow.
At the same time, economists remain firm that unchecked rate cuts could undo recent progress in stabilising the economy.
The decision from the September meeting will be crucial in shaping the country’s economic recovery trajectory, balancing the urgency of cheaper credit against the risks of renewed inflation.
