Economist and Finance Lecturer at the University of Ghana Business School, Professor Patrick Asuming has questioned the Bank of Ghana’s decision to cut its benchmark policy rate by 300 basis points, describing the move as aggressive and surprising.
The central bank lowered the rate from 28% to 25% at its July Monetary Policy Committee (MPC) meeting, citing improved macroeconomic conditions and a sustained disinflation trend.
But Professor Asuming in a Citi Business News interview said he had anticipated a more moderate adjustment which could have been either a 100 basis point cut or a hold arguing that while indicators have improved, the economy is not yet fully out of the woods.
Despite his reservations, Professor Asuming does not expect the policy shift to reverse the current disinflation trajectory.
However, he maintains that a more cautious approach would have provided room to better assess the durability of recent economic gains.
“I don’t think there will be a reversal. I think there is some momentum disinflation has gathered that may continue for a little while. We haven’t seen the full pass through effect of the impact of the currency appreciation and don’t forget that we are also entering our harvest season and there is expectation that this year, harvest will, be good so that should help push down food inflation down a little more.”
The central bank has indicated it will continue to monitor macroeconomic conditions to guide future policy decisions.
The rate cut follows a further drop in headline inflation to 13.7% in June 2025, down from 18.4% in May, marking the lowest reading since December 2021.
The cedi has also appreciated against major trading currencies, and external sector buffers have strengthened, supporting the central bank’s rationale for easing.
“I don’t think that we will see an about turn in disinflation. Perhaps we could have waited two more months. We could have even been in our medium term target, then we are on a stronger ground to target policy rate,” Professor Patrick Asuming said.