Ghana’s rapid monetary easing cycle has created a new dilemma for households and businesses: borrow now, or wait for even cheaper credit in the months ahead? With the Bank of Ghana cutting its policy rate by 350 basis points to 18%, one of the steepest reductions in recent years, the financial landscape is shifting quickly, leaving borrowers weighing the cost of acting now versus delaying major financial decisions.
The expectation of further declines is not speculative. The Ghana Reference Rate (GRR), which guides the pricing of loans across the banking sector, has fallen from above 28% at the start of the year to 17.93% in November, according to the Ghana Association of Banks. With the latest policy rate reduction now baked into the computation formula, analysts predict another substantial drop, potentially pushing the GRR down to about 15.7–16% when the next update is released.
This declining trajectory, while positive for the broader economy, is creating a timing puzzle for prospective borrowers. Should individuals and companies lock in credit now, or delay borrowing in anticipation of even lower rates?
Dr. Benjamin Amoah, senior lecturer in finance at the University of Ghana Business School, believes the current rate environment demands strategic thinking from borrowers. “Clearly what it means here is that, and from the predictions, we have been told that even the rate will decline further,” he said. “So it means that going forward, we should still expect some rate decline. For you, the individual, you have to ask yourself, is it a time for you to borrow? Because if the expectation is that going forward, rates will decline, if you can defer the urge to borrow now, all things being equal, when the rate declines in the future, you can borrow at that rate.”
The same reasoning, he noted, applies to business owners. Companies planning capital expansion, equipment upgrades or working-capital financing may find it beneficial to delay major borrowing decisions if they are not under immediate operational pressure.
But the strategic “wait-and-see” approach has wider implications. According to Dr. Amoah, expectations of continuously declining rates tend to slow borrowing activity even as credit becomes cheaper. “The negative side for the banks and the economy is that when the prediction is that consistently rates will decline, then the behavior is that I’ll wait and see. So you’ll see the rates declining, but then the pickup in terms of credit will decline for some banks because some of the borrowers can afford to wait before they borrow.”
For now, the banking industry is preparing for another significant drop in the reference rate. Mr. Lawrence Sackey, Head of Research at the Ghana Association of Banks, confirmed that the correlation between policy rate reductions and lending rate movements has strengthened this year. “Look at the data from January to this point; we’ve seen that there’s that correlation when it comes to a decline or a decrease in the policy rate and then that of the lending rate,” he explained. With the policy rate cut already in effect, he expects the GRR computation to reflect this change almost immediately. “Since the policy rates have now dropped to about 350 basis points, we are expecting at least about 200 basis points deep in the Ghana Reference Rate … possibly next Wednesday, December 3.”
Sackey, however, emphasized that the GRR is only a benchmark, not the rate at which banks lend. “The Ghana Reference Rate is the benchmark rate. It doesn’t mean that banks are going to lend to businesses at that rate,” he said. Banks must still assess customer-specific risk, meaning that even if the GRR dips toward 16%, effective lending rates will differ across borrowers.
The Bank of Ghana’s own data shows that average lending rates have already fallen to 22.22% as of October, down from over 30% earlier in the year, marking one of the fastest repricing periods in recent memory. The combination of easing inflation, sustained currency stability, and the shift in monetary policy posture suggests that borrowing costs may continue to soften , raising the stakes for the decision on when to borrow.
With the next GRR update expected within days, borrowers across the country now face a strategic choice: secure credit in an already improved rate environment or hold back in hopes of locking in even better terms ahead. As the experts caution, timing may now be just as important as cost in Ghana’s evolving credit market.
