Ghana’s lending landscape is undergoing one of its most significant shifts in years, with the Ghana Reference Rate (GRR) dropping sharply to 17.86% in October 2025, its lowest point in more than two years.
For a rate that hovered around 29% at the start of the year, this decline marks a major turning point for businesses, borrowers, and banks alike.
The GRR, used as the base rate for pricing all loans in the banking sector, mirrors the combined movement of the 91-day Treasury bill rate, the Monetary Policy Rate (MPR), and the interbank overnight rate. And in 2025, all three indicators have been moving in the same direction: downward, rapidly.
What has emerged is not just a shift in numbers, but a broader story about easing financial pressures, improved liquidity, and a banking sector gradually stepping away from the era of ultra-high interest rates.
A Steady Slide From January: The GRR Begins to Ease
The year opened with the GRR at 29.72% in January, rising slightly to 29.96% in February, before beginning a decisive decline. By April, it had dropped to 23.99%, holding steady for two months and then edging down to 23.80% in June. A steeper fall followed in the third quarter as inflation slowed, fiscal consolidation gained traction, and short-term government securities began to reprice.
By September, the GRR had plunged to 19.86%, and October brought the biggest milestone yet, 17.86%, the closest Ghana has come to pre-crisis financing conditions in years.
This shift is reshaping business sentiment. Banks are recalibrating loan books, SMEs see a new window for expansion, and consumers are beginning to feel a slight easing in the cost of credit.
Treasury Bill Yields Lead the Downward Charge
A major part of the story lies in the dramatic fall in short-term government securities. The 91-day Treasury bill, one of the key components of the GRR calculation, collapsed from 28.37% in January to just 10.63% in October.
This turnaround is more than a technical adjustment, it signals renewed investor confidence, a reduction in domestic borrowing pressures, and improved macroeconomic stability. As the government’s appetite for expensive short-term funding moderates, the entire interest-rate structure responds.
With the 91-day bill repricing so sharply, it significantly lowered the base cost of funds used in the GRR formula, accelerating the overall decline.
Monetary Policy Eases, Sending a Signal Through the System
The Bank of Ghana’s policy stance provided another strong tailwind. After holding the MPR at 27% for months, the central bank raised it slightly to 28% in March, but then began a decisive easing cycle.
By July, the rate had dropped to 25%, and by September it had fallen to 21.5%, marking one of the most aggressive policy adjustments since the peak of Ghana’s inflation crisis.
A lower policy rate reduces the cost of credit, enhances liquidity, and encourages banks to price loans more competitively. The GRR responded accordingly, tracking the softer monetary environment with consistent month-on-month declines.
Interbank Rates Cool as Liquidity Improves
Another critical factor behind the GRR’s fall is the steady easing of overnight interbank rates, the cost at which banks lend to one another. Rates that hovered around 27% early in the year gradually softened to 21% by October.
This cooling points to improved liquidity within the banking sector, supported by better reserve positions and a more predictable macroeconomic climate. When banks can access cheaper funds overnight, the ripple effect naturally lowers the benchmark for lending across the industry.
With Treasury yields falling, policy rates easing, and interbank rates softening, all three determinants of the GRR moved in harmony, creating the perfect conditions for a dramatic decline.
A New Era for Borrowers—and A Test for Banks
The new GRR level signals relief for businesses that have struggled under punishing borrowing costs. Manufacturers, traders, SMEs, and households are gradually seeing improved loan pricing, especially for medium-term and working capital facilities.
For banks, however, the shift presents a more complex challenge. Lower reference rates compress interest margins and force lenders to become more efficient in risk management, cost control, and credit allocation. The competitive landscape may intensify as institutions seek to retain strong borrowers and win new clients in a lower-rate environment.
What Comes Next?
If inflation continues its downward path and fiscal pressures remain contained, Ghana may be entering a new phase of interest-rate normalization, one that supports growth rather than stifling it.
However, the sustainability of the trend will depend on disciplined economic management, stable domestic financing conditions, and continued improvements in the treasury market.
For now, the GRR is falling, and the cost of borrowing in Ghana is finally beginning to breathe again.
