Finance — Business

Slowed Ghanaian inflation reaches a four-year low, intensifying rate reduction possibilities

Decline in Ghana's inflation continues, reaching a four-year low in August at 11.5%, following a 1.3% drop in prices month-on-month. Alhassan Iddrisu, Government Statistician, confirmed this figure. The decrease in inflation promotes increased calls for reduced borrowing rates.

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2025 September 13 . 11:36 PM

2 min read

Slowing inflation in Ghana hits a four-year low, bolstering the likelihood of an interest rate... — Slowing inflation in Ghana hits a four-year low, bolstering the likelihood of an interest rate reduction.

Slowed Ghanaian inflation reaches a four-year low, intensifying rate reduction possibilities

Ghanaian Cedi Strengthens as Bank of Ghana Contemplates Further Interest Rate Cuts

In a move that could boost economic growth, the Bank of Ghana's Monetary Policy Committee (MPC) is considering another reduction in interest rates at its upcoming meeting on September 17th. This decision comes on the back of a 300 basis-points cut to 25% in July, as announced by the Governor, Johnson Asiama.

Ghana's currency, the cedi, has been on a positive trajectory this year, gaining 23% against the US dollar. This impressive gain is largely attributed to rising prices of key exports such as cocoa and gold.

The latest data indicates that the disinflation trend is continuing, with prices decreasing by 1.3% month-on-month in August. This decline is reflected in both food and non-food inflation rates. Food inflation eased to 14.8% in August, down from 15.1% the previous month, while non-food inflation dropped to 8.7% from 9.5%.

As a result, annual inflation in Ghana decreased to 11.5% in August, a decrease from 12.1% in July. This is a positive step towards the central bank's target of keeping inflation within the 6-10% range by the end of the year.

Governor Asiama has suggested that the MPC may reduce the policy rate further if the disinflation trend continues. However, the committee will continue to assess incoming data before making a decision.

On Wednesday, the cedi traded at 11.95 per dollar, reflecting the positive momentum in the currency's value this year. The reduction in interest rates and the strengthening cedi could encourage investment in Ghana, potentially boosting economic growth.

As the MPC prepares for its September meeting, businesses and investors are eagerly awaiting the decision on interest rates. A further cut could provide a much-needed stimulus to the Ghanaian economy, helping it navigate through the challenges posed by the global economic downturn.