Businesses with variable-rate loans may soon find relief, as the Ghana Association of Banks (GAB) has announced a further cut in the Ghana Reference Rate (GRR).
The benchmark rate, which guides lending and borrowing across the banking sector, has been reduced to 17.86% for October 2025, down from 19.86% in September. The two-percentage-point drop is expected to lower the cost of credit for households and businesses, potentially stimulating new investments and consumer spending.
However, some analysts caution that a rapid decline in loan rates, while easing the burden on borrowers, could carry risks. If credit expansion accelerates too quickly, it may reverse the progress made in taming inflation.
So far, inflation has been on a steady decline. September 2025 marked the ninth consecutive month of disinflation, with the rate easing to 9.4%, well below the double-digit levels seen at the start of the year.
The broader economic environment also reflects easing monetary conditions. The 91-day treasury bill rate, for instance, fell from 13.4% at the end of July to 10.3% in August, while average lending rates across banks have dropped from 26.6% to 24.2%, according to the Bank of Ghana’s latest Monetary Policy Report.
Industry watchers link the sharp reduction in the GRR to sustained improvements in key macroeconomic indicators, particularly falling inflation, lower yields on government securities, and the Bank of Ghana’s aggressive policy rate cuts. The central bank has slashed its benchmark by more than 600 basis points this year, bringing it to 21.5%.
The GRR, which began 2025 at 29.72% and briefly ticked up to 29.96% in February, has since maintained a downward trajectory, sliding to 19.67% in August before this latest October revision.
While businesses and households may welcome the relief from lower borrowing costs, the coming months will test whether the balance between credit growth and price stability can be maintained.
