Economist and University of Ghana Finance Professor, Godfred Bokpin, is forecasting a 300 to 500 basis points cut in the Bank of Ghana’s policy rate at its upcoming 125th Monetary Policy Committee (MPC) meeting scheduled for July 28–30, 2025.
Speaking at the launch of the “Sustainable Debt Management in Ghana” report by the Economic Governance Platform (EGP) and Open Society Foundations (OSF) on Thursday, July 10, Prof Bokpin emphasised that current macroeconomic conditions leave the Central Bank with “no choice” but to ease its monetary stance.
“They have no choice. In my estimation, I’m expecting a rate cut between 300 and 500 basis points,” he asserted.
Prof Bokpin pointed out that the sharp fall in inflation to 13.7%, juxtaposed against the current policy rate of 28%, creates an unjustifiable gap.
“If you look at the gap, where inflation is right now, and where the policy rate is, it’s abnormal. Inflation has come down significantly, but the policy rate remains high. Just as there was pressure on traders to reduce prices when the cedi strengthened, there must also be similar pressure on the Bank of Ghana to reduce the policy rate because it is also a price,” he argued.
Calls for Model Review
The finance professor also urged the Central Bank to review its inflation forecasting model, questioning whether past decisions adequately captured Ghana’s disinflation trend.
“The policy rate has a signaling effect. It should stay ahead of market expectations and guide investor sentiment. With inflation now at 13.7%, I think the Bank of Ghana has enough room to bring the rate down,” he said.
Recent declines in yields on BoG bills suggest the Central Bank may indeed be preparing for a policy rate reduction, a move that could ease borrowing costs, stimulate investment, and bolster Ghana’s economic recovery.
