Ghana’s Bank Deposits Offer Negative Real Returns as Rates Lag Behind Inflation

The latest Summary of Economic and Financial Data published by the Bank of Ghana indicates that savings deposit rates have remained flat at 5% for over a year, while demand deposit rates hover at just 2.63%.

Time deposit rates, which typically provide higher yields, also offer little relief, averaging 10.5% for three-month and 6-month tenures, unchanged since mid-2024.

Meanwhile, inflation, though on a declining trend from over 20% a year ago, still vastly outpaces returns on savings, leaving depositors with deeply negative real interest rates. This means that money kept in savings accounts is effectively losing purchasing power each month.

For instance, with inflation at 13.7% and savings rates fixed at 5%, the real return on savings stands at around -8.7%, a stark disincentive for traditional deposit savings. Even time deposits fall short, with real returns still firmly in negative territory.

This mismatch between inflation and deposit rates raises concerns about Ghana’s monetary transmission mechanisms and financial inclusion. Low deposit rates in high-inflation environments discourage formal savings, potentially driving more Ghanaians toward informal financial systems or speculative assets.

The data also reveals a static interest rate environment across the banking sector, with no meaningful adjustments to reflect falling inflation or the central bank’s monetary policy rate, which has held steady at 28% since April 2025.

While the policy rate remains elevated to curb inflation and stabilise the cedi, it has not translated into higher returns for savers. In contrast, banks continue to lend at average rates of around 27%, preserving wide interest margins while passing little benefit to depositors.

The situation underscores broader concerns around the real value of money and the incentives needed to promote long-term financial savings in the formal economy. As inflation moderates, pressure is likely to mount on banks and policymakers to realign deposit rates and rebuild trust in the financial system’s ability to preserve value.