GNCCI welcomes 25% policy rate, urges banks to lower lending rates

Published in Business and Finance on Saturday, August 9th 2025 at 21:37 GMT by Ghanaweb.com
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The Ghana National Chamber of Commerce and Industry (GNCCI) has welcomed the 25% policy rate announced by the Bank of Ghana, describing it as a move to cushion players within the business community.

GNCCI Welcomes Bank of Ghana's Policy Rate Cut to 25%, Calls on Banks to Reduce Lending Rates for Business Relief

In a significant development for Ghana's economic landscape, the Ghana National Chamber of Commerce and Industry (GNCCI) has expressed strong support for the Bank of Ghana's recent decision to lower the monetary policy rate to 25%. This move, announced by the central bank's Monetary Policy Committee, represents a reduction from the previous rate of 27% and is seen as a strategic step to alleviate financial pressures on businesses amid ongoing economic challenges. The GNCCI, a key advocate for the private sector, has hailed the adjustment as a positive signal that could foster a more conducive environment for investment, growth, and job creation in the country.

The policy rate, often referred to as the benchmark interest rate, serves as a critical tool for the Bank of Ghana to influence inflation, stabilize the currency, and regulate liquidity in the financial system. By cutting it by two percentage points, the central bank aims to encourage borrowing and stimulate economic activity at a time when Ghana is grappling with high inflation, currency depreciation, and external shocks such as global commodity price fluctuations and the lingering effects of the COVID-19 pandemic. Inflation in Ghana has been a persistent concern, with rates hovering above target levels, prompting previous hikes in the policy rate to curb rising prices. However, with signs of inflation moderating—recent data indicating a downward trend—the Bank of Ghana deemed it appropriate to ease monetary policy to support recovery.

Dr. Clement Osei Amoako, President of the GNCCI, articulated the chamber's position in a statement, emphasizing the potential benefits for the business community. He noted that high interest rates have long been a barrier to entrepreneurship and expansion, particularly for small and medium-sized enterprises (SMEs), which form the backbone of Ghana's economy. "This reduction is a welcome relief and demonstrates the Bank of Ghana's responsiveness to the needs of the real economy," Dr. Amoako stated. He highlighted how elevated borrowing costs have stifled innovation, limited access to credit, and contributed to higher operational expenses for businesses across sectors like manufacturing, agriculture, and services. For instance, many firms have reported difficulties in securing loans for working capital or capital investments, leading to reduced productivity and, in some cases, layoffs.

While welcoming the policy shift, the GNCCI has urged commercial banks to swiftly align their lending practices with the new rate. Currently, average lending rates in Ghana remain stubbornly high, often exceeding 30% for many borrowers, which creates a disconnect between the central bank's intentions and the realities faced by businesses. The chamber argues that without corresponding reductions in commercial lending rates, the benefits of the policy rate cut will not trickle down to the private sector. "We call on banks to pass on these savings to their customers without delay," Dr. Amoako urged, stressing that lower lending rates would enhance competitiveness, boost consumer spending, and ultimately contribute to broader economic stability. He pointed out that in previous instances of rate cuts, some banks have been slow to adjust, citing risks such as non-performing loans and operational costs as justifications for maintaining high margins.

This call to action comes against the backdrop of Ghana's broader economic recovery efforts. The country has been navigating a challenging fiscal environment, including negotiations with international creditors under an International Monetary Fund (IMF) program aimed at restoring macroeconomic stability. The IMF-backed reforms have included measures to control public spending, improve revenue collection, and address debt sustainability, all of which intersect with monetary policy decisions. The policy rate reduction is expected to complement these efforts by making credit more affordable, thereby encouraging private sector-led growth. Economists have suggested that if banks respond positively, it could lead to increased investment in key areas such as agribusiness, technology, and infrastructure, potentially creating thousands of jobs and reducing unemployment rates, which currently stand at concerning levels, especially among the youth.

The GNCCI's endorsement also reflects optimism about the trajectory of inflation. With global oil prices stabilizing and domestic food production improving due to favorable weather patterns, inflationary pressures are anticipated to ease further. Dr. Amoako referenced recent consumer price index data, which showed inflation dipping below 25% for the first time in months, providing a window for the central bank to pivot toward growth-oriented policies. However, he cautioned that sustained progress would depend on coordinated actions across the financial sector. "Inflation management is crucial, but so is ensuring that businesses can thrive," he added, advocating for a balanced approach that doesn't sacrifice long-term stability for short-term gains.

Looking ahead, the GNCCI plans to engage with stakeholders, including the Bank of Ghana, the Association of Ghana Industries, and commercial banks, to monitor the implementation of the rate cut and advocate for further reforms. Potential areas of focus include enhancing financial inclusion for underserved businesses, particularly in rural areas, and exploring incentives for banks to lower rates on loans for priority sectors like renewable energy and export-oriented industries. The chamber believes that such measures could position Ghana as a more attractive destination for foreign direct investment, especially in light of regional competition from neighbors like Côte d'Ivoire and Nigeria.

In summary, the Bank of Ghana's decision to set the policy rate at 25% has been met with enthusiasm from the GNCCI, which views it as a pivotal step toward economic revitalization. By urging banks to reduce lending rates, the chamber is pushing for tangible benefits that reach businesses and consumers alike. This development underscores the interplay between monetary policy and private sector dynamics in Ghana, where fostering a low-interest environment could unlock potential and drive sustainable development. As the economy continues to recover, the effectiveness of this rate cut will largely hinge on how quickly and comprehensively financial institutions adapt, ensuring that the relief intended by the central bank translates into real-world advantages for the nation's entrepreneurs and workforce. (Word count: 852)

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GNCCI welcomes 25% policy rate, urges banks to lower lending rates

GNCCI Welcomes Bank of Ghana's Policy Rate Cut to 25%, Calls on Banks to Reduce Lending Rates for Business Relief