Bank of Ghana (BoG) Governor Dr. Johnson Asiama has offered his most detailed public account of the sequencing decisions that produced Ghana’s simultaneous improvement across six key economic indicators over the past 13 months, arguing that the order in which the central bank moved mattered as much as the moves themselves.
Speaking at the Ghana Export-Import Bank (GEXIM) 10th Anniversary International Conference in Accra, Dr. Asiama responded to a question from moderator Bernard Avle, who asked whether the Governor’s primary objective was simply to cut all rates. “They are all interconnected. When you influence one, it reflects in all the other rates,” the Governor replied, framing the improvements not as parallel achievements but as a chain reaction that had to be triggered in the right sequence.
The six-indicator scorecard between February 2025 and February 2026 is striking. Headline inflation fell from 23.1 percent to 3.3 percent, a reduction of 19.8 percentage points. The Monetary Policy Rate (MPR) was cut from 27 percent to 14 percent, a reduction of 1,300 basis points. The Ghana Reference Rate (GRR) dropped from 29 percent to 14 percent, down 1,500 basis points. Average bank lending rates fell from 30.12 percent to 19.7 percent. The cedi strengthened against the dollar, with the US dollar selling rate moving from GH¢15.3 to GH¢10.95. Gross international reserves rose from US$8.9 billion to US$13.8 billion.
Dr. Asiama explained that the sequence began with the absorption of excess liquidity from the financial system, a step that directly targeted inflationary pressure rather than managing its symptoms through exchange rate intervention or administrative price controls. As liquidity tightened and inflation declined, the Monetary Policy Committee gained room to reduce the policy rate. The GRR and commercial lending rates followed. The exchange rate then reflected those improvements organically, without the Bank fixing a rate.
He was explicit about what the alternatives would have cost. Cutting the policy rate before inflation was sufficiently reduced would have risked reigniting price pressures and undermining the exchange rate, potentially reversing the cedi’s recovery and eroding the reserves position. Prioritising exchange rate stability through direct intervention, without first addressing the monetary conditions driving depreciation, would have depleted reserves without resolving the underlying problem. Either misstep, he said, would have left the economy with some indicators improving while others deteriorated, a fragile outcome that Ghana could not afford entering a period of global energy market disruption.
On lending rates specifically, Dr. Asiama was direct. “Lending rates for me is the most important one and I have always said it. If you borrow money at over 30 percent, can you really repay it? It is not surprising that non-performing loans are very high,” he said.
The 10.4 percentage point fall in average lending rates over 13 months is among the sharpest such movements in recent memory. Yet real borrowing costs remain elevated. With average lending rates at 19.7 percent and headline inflation at 3.3 percent, the real cost of borrowing sits at approximately 16.4 percentage points, meaning businesses that can access credit are still paying substantially in inflation-adjusted terms.
Dr. Asiama acknowledged the work is incomplete but pointed to a deeper behavioural shift he regards as essential to sustaining gains: breaking decades of cedi depreciation expectations embedded in how businesses price goods and set wages. He expressed confidence that another year of sustained stability would alter that behaviour without compulsion, as businesses and households begin to see the cedi as a reliable unit of account in its own right.
