Ghanaian businesses are yet to see a meaningful reduction in borrowing costs despite a steep fall in market interest rates and easing inflation, with the central bank pointing to transmission delays and cautious bank lending behaviour.
At its 130th Monetary Policy Committee (MPC) briefing, the Bank of Ghana kept its policy rate unchanged at 14.0%, even as it highlighted a broad easing in financial conditions across the economy. The central bank also reduced the dynamic cash reserve ratio to a uniform 20%, effective June 4, 2026, as part of liquidity management measures.
Money market rates have fallen sharply over the past year. The 91-day Treasury bill yield dropped to 4.9% in April 2026 from 15.5% a year earlier, while the Ghana Reference Rate eased to 10.06% from 23.99%. Average commercial bank lending rates also declined to 16.3% from 27.4% over the same period.
Inflation has remained relatively contained, rising marginally to 3.4% in April 2026 from 3.2% in March, with core inflation easing further, suggesting subdued underlying price pressures.
Private sector credit has also rebounded strongly, expanding by 28.7% in nominal terms in April 2026 compared with 19.9% a year earlier, while real credit growth rose 24.5%, reversing a 1.1% contraction in the same period of 2025.
Despite these improvements, businesses have continued to question why borrowing costs remain elevated in practice, and why loan pricing has not adjusted more quickly to the broader decline in interest rates.
Responding to the issue, the Governor of the Bank of Ghana said the pass-through from policy rates to lending rates typically occurs with a lag, particularly in periods of structural adjustment in the banking sector.
“When the interest rates are falling, it may take a while… remember the low interest regime we are having currently is quite new to the banks,” he said.
He explained that banks require time to reprice assets and adjust balance sheet structures following shifts in the interest rate environment.
“It takes time for them to shift their portfolios,” he added.
The Governor also pointed to risk considerations in bank lending decisions, stressing that credit expansion is constrained not only by liquidity conditions but also by the availability of viable projects.
“You don’t just rush into giving out loans… there has to be bankable adequate projects… you don’t compromise your credit appraisal standards,” he said.
The governor noted that while the monetary easing cycle has helped reduce headline borrowing benchmarks, the speed of adjustment at the retail lending level remains uneven.
The central bank said it expects stronger transmission over time as the lower interest environment becomes entrenched and banks gradually adjust pricing models and risk assessments.
The policy decision to hold the benchmark rate at 14% was also influenced by a cautious outlook, with the MPC citing global risks, including geopolitical tensions in the Middle East, as factors that could reintroduce inflationary pressures and complicate the easing cycle.
For now, while financial indicators point to a clear easing in macroeconomic conditions, the gap between policy rates and the cost of credit for businesses remains a key constraint in the real economy.
