Development economist Dr George Domfe has called on the Bank of Ghana (BoG) to significantly reduce its policy rate if inflation has genuinely dropped to 3.8 percent, warning that maintaining high borrowing costs when inflation has fallen risks stifling credit, business expansion, and job creation.
Speaking on the Asaase Breakfast Show on Thursday, 5th February 2026, Domfe argued that under the central bank’s inflation targeting framework, policy rates must move in tandem with price levels, with the current rate of 15.5 percent appearing too high relative to the latest inflation data.
Ghana’s headline inflation rate fell to 3.8 percent in January 2026 from 5.4 percent in December 2025, marking the lowest recorded since the rebasing of the Consumer Price Index in 2021 and the 13th consecutive month of decline. The rate represents the lowest inflation level since August 1999, when inflation stood at 1.4 percent.
The BoG cut its monetary policy rate by 250 basis points to 15.5 percent in late January 2026 following sustained disinflation, but Domfe believes further cuts are warranted given the latest inflation numbers.
Domfe explained that high policy rates translate into expensive loans, discouraging businesses and individuals from borrowing to invest. He noted that when inflation peaked above 50 percent in 2022, the central bank adopted a contractionary stance by raising policy rates to curb spending, but stressed that the opposite approach is now required.
The economist emphasized that lower rates would encourage entrepreneurs to start new ventures, expand operations, and hire more workers, describing accessible credit as key to addressing unemployment.
However, Domfe stressed that any rate cuts must be backed by credible data, cautioning that if the inflation numbers are not accurate, the policy response will also be wrong.
Dr George Domfe is a Senior Research Fellow at the Centre for Social Policy Studies at the College of Humanities, University of Ghana, and Executive Director of the Institute of Economic Research and Public Policy.
Food inflation declined to 3.9 percent year on year in January from 4.9 percent in December, while non food inflation eased sharply to 3.9 percent from 5.8 percent. Inflation for locally produced items declined to 4.5 percent for January from 5.9 percent in December, while inflation on imported items dropped more sharply to 2.0 percent from 4.3 percent.
Government Statistician Dr Alhassan Iddrisu said the sustained decline signals that Ghana is firmly on a path towards price stability, urging the government to sustain fiscal discipline and continue efforts to stabilize food prices.
The BoG has reduced its policy rate from a peak of 30 percent in mid 2023 to the current 15.5 percent through successive cuts totaling 1,450 basis points, driven by sustained disinflation and fiscal consolidation.
The Monetary Policy Committee forecast indicates that headline inflation is broadly expected to be within the medium term target, barring potential spillover risks from upward adjustments in utility prices and commodity market volatility.
