Commercial banks have begun reducing interest rates on both existing and new loan facilities following the recent cut in the Ghana Reference Rate (GRR).

Chief Executive Officer of the Ghana Association of Banks, John Awuah, says the adjustment has become almost automatic for most banks, particularly this week, following the GRR's reduction to 15.68 per cent, effective January 7, 2026.

He explained that the reductions primarily apply to customers and businesses whose loans were negotiated at variable interest rates, allowing rates to adjust in line with changes in the benchmark.

Justifying the Margin of Reduction

Mr Awuah defended the size of the reduction in the Ghana Reference Rate, noting that data from the Ghana Association of Banks shows the rate declined from 15.9 per cent in December 2025 to 15.68 per cent in January 2026.

While some critics have described the cut as marginal, he stressed that the adjustment reflects movements in the key indicators that determine the GRR.

He also rejected claims that commercial banks are shortchanging borrowers or deliberately delaying the transmission of GRR reductions into lending rates.

“The Ghana Reference Rate is a derived rate. It cannot change on its own unless there are movements in other indicators such as the monetary policy rate, Treasury bill rates and interbank rates,” Mr Awuah explained.

He further noted that, with the exception of Treasury bill rates, the Ghana Reference Rate recorded one of the most significant declines among key interest indicators last year.

Background

The Ghana Reference Rate — a key benchmark used by commercial banks to price loans — was reviewed downward on January 7, 2026, from 15.9 percent to 15.68 percent.

In December 2025, the GRR had already declined to 15.9 per cent following a 350-basis-point cut in the Monetary Policy Rate to 18 per cent, alongside a marginal drop in Treasury bill rates.

Earlier in the year, the GRR showed mixed movements. In November 2025, it edged up slightly to 17.96 per cent from 17.86 per cent, influenced by modest increases in Treasury bill and interbank rates.

In October, however, the rate fell sharply by two percentage points from 19.86 percent in September, continuing a broader downward trend.

The GRR, which stood at 29.72 percent in January 2025, rose marginally in February before declining steadily to 19.67 percent by August 2025.

Loans contracted in January 2026 at variable interest rates are expected to be benchmarked against the new Ghana Reference Rate, which means borrowers should benefit from lower interest payments than in late 2025.