Ghana reference rate falls to 15.9% in December

The key lending benchmark, the Ghana Reference Rate (GRR), has fallen sharply to 15.9% in December 2025, marking a 200 basis-point decline from November’s 17.93%, according to data from the Ghana Association of Banks.

The move is expected to create room for commercial banks to lower borrowing costs, potentially easing credit conditions for businesses and households.

The decline in the GRR comes after a series of monetary adjustments aimed at stabilising the economy and reducing inflationary pressures.

Analysts point to the 350-basis-point cut in the Monetary Policy Rate (MPR) to 18% and a steep fall in Treasury bill rates as key drivers behind the December adjustment. Interbank market rates also contributed to the drop, reflecting improved liquidity conditions in the banking sector.

The GRR, which was introduced in 2017 by the Bank of Ghana and the Ghana Association of Banks, serves as a transparent benchmark for pricing loans and lending rates.

The maiden rate of 16.82% in April 2017 replaced the previous base rate model, providing a more consistent framework for interest rate decisions across the financial sector.

Over the course of 2025, the GRR has been on a generally downward trend, starting the year at 29.72% in January and declining steadily to 19.67% in August, despite minor fluctuations in between.

Commercial banks have indicated that loans contracted in December are likely to be benchmarked on the new GRR.

While borrowers with fixed-rate agreements will see no immediate change, clients on variable-rate loans may benefit from lower interest payments depending on the pricing structure of their financial institution.

The decline in the GRR coincides with a broader easing of lending rates across the country.

The latest Monetary Policy Report shows that average lending rates have fallen from 26.6% to 24.2%, reflecting improving credit conditions amid a tighter inflation environment.

The Bank of Ghana has also recorded a drop in money market yields, with the 91-day Treasury bill rate decreasing from 13.4% in July to 10.3% in August 2025.

Economists note that the falling GRR and lending rates could provide relief to businesses facing liquidity challenges, particularly in sectors that have struggled to access affordable credit during periods of high inflation and interest rate volatility. By reducing the cost of borrowing, the adjustment may encourage investment, production expansion, and broader economic growth.

Historically, the GRR has mirrored the efforts to stabilise financial markets while supporting credit growth.

While the benchmark rate experienced a marginal increase in November 2025 to 17.96% from 17.86% due to slight rises in Treasury bill and interbank rates, the December drop signals renewed momentum in efforts to ease borrowing costs and strengthen confidence in the financial sector.