Ghana holds the widest real interest rate gap among African economies with single-digit inflation. This gap, approximately 10.6 percentage points, significantly restricts private sector access to credit. The Bank of Ghana (BoG) recently maintained its benchmark policy rate at 14 percent, even as inflation stood at 3.4 percent in April 2026.
The large real interest rate is “throttling private sector credit access,” according to economists. This happens even though the BoG stated the domestic recovery was on track. The Monetary Policy Committee (MPC) made its decision to hold the rate at its 130th meeting on May 20. This widening gap contrasts sharply with the BoG’s goal of supporting growth led by the private sector.
This situation positions Ghana strikingly among its peers and globally. Other African nations with similar inflation rates show much smaller real interest rate gaps. For example, South Africa's real rate is 2.75 percentage points with a 6.75 percent repo rate and 4 percent inflation. Kenya, after ten rate cuts, has a real rate of 3.15 percentage points. Tanzania's policy rate of 5.75 percent against 4 percent inflation yields a 1.75 percentage point spread. Nigeria’s wider nominal gap of 10.81 percentage points reflects crisis management against high double-digit inflation, which is a different economic scenario.
Dr. Daniel Osabutey, a Senior Lecturer at Accra Technical University's School of Business, explained the anomaly. He stated, “The Bank of Ghana would have cut further but for the vulnerabilities it identified.” He added that external factors such as the Middle East conflict, rising import costs, and the cedi’s depreciation complicated the decision. He noted that inflation simply fell faster than the committee felt comfortable following with rate cuts. The BoG cut the policy rate five consecutive times, from 29 percent to 14 percent. However, inflation plummeted more rapidly, from 54 percent in late 2022 to 3.4 percent in April 2026. This means the real rate became more restrictive in practical terms, even as the official rate dropped.
The MPC’s decision on May 20 was widely anticipated. This followed April’s slight inflation increase and global risks, including the Middle East conflict. Governor Dr. Johnson Pandit Asiama cited disruptions in maritime and air traffic and rising global energy and food prices. He also mentioned the IMF’s revised 2026 global growth forecast, lowered from 3.3 percent to 3.1 percent. These factors all contributed to the Committee’s cautious stance.
Despite challenges, the domestic economy shows signs of strength. The Composite Index of Economic Activity (CEAI) grew by 12.6 percent year-on-year in March 2026. Ghana also recorded a fiscal surplus of 0.1 percent of Gross Domestic Product (GDP) in the first quarter. This surpassed a target deficit of 1.2 percent. However, these positive economic indicators have not translated into affordable credit for businesses. Average commercial bank lending rates remain above 20 percent. This represents a spread of over six percentage points above the policy rate. This high spread reflects risk pricing, liquidity management costs, and the lingering effects of the Domestic Debt Exchange Programme (DDEP).
The implications are significant for Ghana's economic growth. Businesses require affordable credit to invest and expand, creating jobs and boosting productivity. The current high real interest rate makes borrowing expensive, hindering these activities. Decision-makers will need to address this gap to unlock full private sector potential. Monitoring inflation trends and global economic developments remains crucial. The BoG’s future policy rate decisions will significantly impact credit availability and overall economic recovery.