BoG warns that monetary policy cuts do not immediately lower loan rates

The Bank of Ghana (BoG) has reminded Ghanaians that a cut in the monetary policy rate does not automatically lead to cheaper loans. In a statement delivered by Dr Simon Harvey, Director of Research at the Bank of Ghana on behalf of Governor Dr Johnson Asiama, it was stressed that changing the policy rate is only one step in a longer process before borrowers see lower interest charges. The caution was made at the Chartered Institute of Bankers Ghana’s third Post‑MPC Policy Seminar.

The warning follows the Monetary Policy Committee's decision to keep the policy rate at 14% after its 132nd regular meeting on September 23 and 24, 2026. Dr Harvey explained that the transmission of monetary policy through banks is neither automatic nor instantaneous. He highlighted several factors—such as banks’ cost of funds, credit risk, operating expenses, capital requirements, and the prevailing risk environment—that influence how loans are priced.

He argued that the success of monetary policy should not be judged only by shifts in the benchmark rate, but by its real impact on lending rates, deposit rates, credit availability, investment, consumption, employment and overall economic activity. According to him, a credible and predictable policy framework, backed by fiscal discipline and an efficient banking sector, is essential for effective transmission.

Dr Harvey also called on banks to improve credit assessment and risk‑management practices, while urging borrowers to honour repayment obligations promptly. He noted that stronger credit extension depends on both the banking system's preparedness and responsible borrowing behaviour across Ghana.

The Bank of Ghana therefore expects that as banks adjust their internal policies and risk considerations, the benefits of any future rate cuts will gradually filter down to households and businesses, supporting price stability and sustainable growth.