The Bank of Ghana has indicated that it expects the policy rate cut to impact the cost of credit and interest rates in the country from October 2025.

According to the Central Bank's Director of Research, Dr Philip Abradu Otoo, the Bank of Ghana expects some immediate impact on the cost of lending to the commercial banks, moving on to impact businesses and individuals.

Speaking on PM EXPRESS BUSINESS EDITION with George Wiafe on September 18, Dr Abradu-Otoo recalled that “at the July Monetary Policy Committee Meeting, when the Bank of Ghana cut the policy rate by 300 basis points, we saw a corresponding 2.5% cut in interest rates.”

“There is the likelihood that this time round we could see some significant cuts in the lending rates of commercial banks in the country,” he noted.

Policy Rate Cut and Concerns

The MPC reduced the policy rate by 300 basis points to 21.5 percent.

While some analysts have warned the move could undermine progress on inflation, Dr Abradu-Otoo defended the decision, stressing that it was driven by data.

“Our international reserves are strong enough to support the local currency and finance imports, while growth is picking up strongly. All this gives us comfort to lower the rate,” he explained.

He added that “in taking this decision, we did factor in all these scenarios, and what we found out is inflation will still be in the single-digit range.”

The rate cut, he said, is also expected to improve credit to key sectors of the economy.

Interest Rates and Non-Performing Loans

Latest data from the Central Bank shows that non-performing loans (NPLs) have improved to 20.8 percent, from 24.8 percent previously.

However, some industry players remain concerned that the ratio is still too high and could weigh on credit delivery, even as borrowing costs decline.

Dr Abradu-Otoo noted that corrective measures are already underway to deal with the high rate of non-performing loans.

“We don’t think that the NPLs will be that bad or remain that high in the coming months based on some measures that the Bank of Ghana has undertaken,” he said.

The Director of Research at the Central Bank also stated that they are working to improve lending to businesses in the country.