Ghana’s consumer inflation rate has fallen to 3.8% in January 2026, marking the 13th consecutive month of decline and the lowest level since the Consumer Price Index was rebased in 2021. The slowdown, driven largely by easing food prices, has brought inflation well below the Bank of Ghana’s medium-term target band of 8% ± 2%.
Yet the relief many anticipated has not materialised for businesses and households still facing elevated borrowing costs, according to University of Ghana economist Professor Godfred Bokpin.
Despite the central bank’s decision in late January to cut its policy rate by 250 basis points to 15.5%—the lowest in four years—lending rates remain stubbornly high. The wide spread between inflation and key interest rates, Bokpin argues, is increasingly difficult to justify and risks stifling private sector expansion.
“The gap is unusual and hard to defend,” Bokpin said in recent commentary. “When inflation falls sharply but borrowing costs stay elevated, it dampens credit demand, discourages investment, and weakens overall growth prospects.”
The disparity stems from persistent tightness in lending conditions. Commercial banks have been slow to pass on the full benefits of the policy rate reductions, citing risks such as non-performing loans, liquidity constraints, and the need to maintain profitability margins. This lag means many small and medium-sized enterprises—the backbone of Ghana’s economy—continue to pay double-digit interest on loans, limiting their ability to expand operations, hire workers, or invest in new equipment.
Households feel the pinch too. Bokpin warns that prolonged misalignment could undermine the gains from macroeconomic stabilisation achieved under Ghana’s IMF-supported programme, potentially slowing the recovery trajectory.
The Bank of Ghana has emphasised that its rate cuts aim to support credit growth while preserving price stability. Governor Johnson Asiama has projected strong economic expansion in 2026, citing improved domestic and global conditions. However, Bokpin calls for more decisive action to narrow the inflation-interest rate wedge, including greater scrutiny of banking sector pricing behaviour and incentives for faster transmission of monetary policy signals.
Analysts note that while inflation’s downward trend reflects disciplined fiscal and monetary management — including cedi appreciation and subdued global commodity pressures — real interest rates remain positive and elevated compared to historical norms. This environment favours savers but penalises borrowers, creating uneven benefits across the economy.
Bokpin advocates for complementary measures beyond rate adjustments, such as targeted interventions to boost credit access for productive sectors and reforms to reduce structural rigidities in the financial system.
