High inflation remains the biggest hurdle to the Bank of Ghana (BoG) Governor’s dream of reducing lending rates to 10%, according to banking and financial analyst Dr. Richmond Atuahene, who ties the goal’s feasibility to effective inflation management
In his view, inflation is the greatest obstacle to this target. With high inflation, he is casting doubt on the Bank of Ghana Governor’s ambitious goal.
The Governor of the Central Bank, Dr. Johnson Asiama recently announced that it is his vision to drag down lending rate to 10% by the end of his tenure as the head of the apex bank.
Lending rate in Ghana, according to the latest BoG report, is currently 27.40% as of April, 2025. This is a drop from 30.07% in January 2025. Despite the marginal drop, Ghana’s lending rate is regarded among the highest in Sub-Saharan Africa making business in the country, uncompetitive on the continent under the AfCFTA framework.
It is the vision of Dr. Asiama to drag down this rate to 10% by the end of his tenure by the end of 2028.
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Responding to the Governor’s target in an interview with The High Street Journal, Dr. Atuahene said that unless inflation is brought sustainably below 10%, such a target remains highly improbable, if not unrealistic.
With the target of 10% lending rate, Dr. Atuahene says inflation must come to at least 9% to make it possible. He says there is need for inflation to come down before there will real returns.
“I can’t challenge him because he sits at the table. But for me, until we were able to achieve 9%, or we achieved inflation to be below 10% because inflation is the greatest threat,” he told The High Street Journal.
Historical Precedents
For Dr. Atuahene, historical records offer little comfort when it comes to taming inflation at a single digit.
Reflecting on past administrations, Dr. Atuahene pointed out that even during more stable periods such as under President Kufuor, Ghana struggled to bring inflation consistently below double digits.
“Our inflation has come down to only 9% maybe once in 20 or 30 years. So if inflation remains high, I don’t see how you can bring interest rates down,” he argued.
He added that, “even good times during former President Kuffour’s time. I don’t think we achieved anything in that time.
Cost-Push Inflation Offers Another Line of Resistance
Ghana’s inflation, Dr. Atuahene explains, is not purely driven by consumer demand which can be managed with rate adjustments but rather by cost factors like currency depreciation, high import dependency, and structural bottlenecks.
These, he insists, make inflation more difficult to tame with conventional tools.
He believes that maybe the Governor’s optimism is because of a bit of cedi stability he has achieved. He said there are more structural bottlenecks that must be addressed to make this vision possible.
Can the Governor Defy the Odds?
According to Dr. Atuahene, there is a direct relationship between inflation and interest rates in inflation-targeting regimes. Central banks raise policy rates as a tool to suppress inflation. Therefore, trying to lower interest rates while inflation is still elevated would conflict with basic monetary policy principles.
While Dr. Atuahene admitted he cannot outright challenge the Governor who has access to real-time economic data and sits at the center of decision-making he remains skeptical unless sustained structural reforms and cost control measures are implemented.
“I don’t know what he’ll do to bring it down. We need to wait and see. But inflation remains the single biggest threat to achieving that 10% lending rate dream,” he concluded.
His comments come at a time when businesses and households are grappling with high borrowing costs, with current average lending rates hovering close to 30%. While a drop to 10% would be a welcome relief, experts like Dr. Atuahene are cautioning against setting expectations too high without addressing underlying inflation drivers.
