Ghana Inflation at Four-Year Low Signals Another Interest Rate Cut

BREAKING NEWSSeptember 3, 2025 at 1:31 PM UTC

TLDR

Ghana’s inflation eased to 11.5% in August 2025, its lowest level in four years, prompting the Bank of Ghana to cut its benchmark rate by 300 basis points to 25%
The slowdown in price growth, from 12.1% in July and 18.4% in May, was driven by moderation in food and non-food prices
Analysts expect further easing, with projections that the policy rate could reach 18% by year-end if inflation continues to fall

Ghana’s inflation eased to 11.5% in August 2025, its lowest level in four years, prompting the Bank of Ghana to cut its benchmark rate by 300 basis points to 25%. The move marks the largest single reduction in the central bank’s history.

The slowdown in price growth, from 12.1% in July and 18.4% in May, was driven by moderation in food and non-food prices. The decline has given policymakers room to ease monetary policy after two years of tightening.

Government bond yields dropped 70 basis points to 17.97% in recent auctions as investors increased demand. The cedi strengthened 24.1% against the dollar in the third quarter, supported by the IMF’s $3 billion program and higher foreign reserves of $10.7 billion.

Analysts expect further easing, with projections that the policy rate could reach 18% by year-end if inflation continues to fall. The IMF has forecast disbursements of $370 million this year to support Ghana’s fiscal position.

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Key Takeaways

Ghana’s disinflation and policy shift provide opportunities in fixed income and currency markets. High-yielding cedi-denominated bonds offer attractive returns, particularly as the currency has gained against the dollar. Frontier market funds and Africa-focused ETFs could give U.S. investors exposure to these assets without direct country risk. Stronger reserves, a current account surplus, and IMF support have underpinned the cedi’s appreciation. Still, risks remain from volatile commodity prices and potential food supply shocks that could reverse inflation gains. For investors, the combination of falling inflation, strong IMF backing, and a credible central bank policy framework positions Ghana as one of the more closely watched frontier markets in 2025. Sustained reforms and continued currency stability will determine whether current gains in bonds and the cedi can hold through the end of the year.

Ghana

Economy

Inflation

Interest Rate

Bank of Ghana

Monetary Policy