Central Bank cuts rates in March

BOG delivers fifth straight rate cut, the smallest so far: At its meeting on 16–18 March, the Bank of Ghana (BOG) cut for the fifth time in a row, reducing its policy rate by 150 basis points to 14.00%. The cut was the smallest since easing began last July but still exceeded market expectations and meant the policy rate has now fallen to half from July 2025’s level.

BOG keeps favorable inflation outlook despite upside risks from the Iran war: The key factors influencing the decision included a substantial decline in headline inflation to 3.3% in February from 5.4% in December, muted underlying price pressures, broadly anchored inflation expectations and the BOG’s forecasts for inflation to remain within the medium-term target range of 6.0–10.0%. Moreover, real interest rates remain high, indicating ample room to ease monetary policy further. That said, BOG noted upside risks to inflation stemming from higher energy prices in wake of the Iran war.

Middle East tensions cloud the outlook: The BOG did not provide explicit forward guidance, though it said it would continue to closely monitor the Middle East war and its potential spillovers on domestic inflation. Most of our panelists still expect further cuts by year-end, ranging from 100 to 200 basis points, while the rest see either a hold or a hike. The next meeting is on 18–20 May.

Panelist insight: Leeuwner Esterhuysen, Senior Economist at Oxford Economics, commented on the outlook: “We think the MPC will hit the brakes on its easing cycle for the remainder of 2026, as we predict inflationary pressures to intensify in H2 due to war-related pressures infiltrating Ghanaian shores.” Goldman Sachs’ Ludovica Ambrosino and Andrew Matheny hold a more hawkish view: “We pushed back our forecasts for the next rate cuts in Ghana until Q3, while maintaining a terminal rate of 12.5%. Nevertheless, we see some risks toward further cuts in Q2, conditional on continued FX strength and low inflation.”

How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects Ghanaian interest rate projections for the next ten years from a panel of 9 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable interest rate forecast available for Ghanaian interest rate.

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