The International Monetary Fund has advised the Bank of Ghana to be careful about cutting its policy rate further, even as inflation continues to improve.

According to the IMF, Ghana may be getting close to the end of its current interest rate cutting cycle. The Fund believes further reductions could make monetary policy too loose at a time when some inflation risks are still present.

One concern is the impact of the war in the Middle East on global energy and fertiliser prices. Higher fuel and fertiliser costs could eventually feed into transport, food and other prices in Ghana.

The IMF also pointed to possible fiscal relaxation under the Policy Coordination Instrument and the continued risk that changes in the value of the cedi could quickly affect local prices.

Why the IMF is concerned about further rate cuts

The Bank of Ghana has reduced its policy rate significantly over the past year.

In March 2026, the Monetary Policy Committee cut the policy rate by 400 basis points to 14%. This brought total rate reductions since July 2025 to 1,400 basis points.

The Bank then kept the rate unchanged in May 2026.

The policy rate is important because it influences borrowing costs and interest rates across the economy. When the Bank of Ghana cuts the rate, loans can become cheaper and economic activity may receive a boost.

However, cutting rates too aggressively can also increase demand and put renewed pressure on inflation and the cedi.

The IMF estimates that Ghana's current monetary policy stance is broadly neutral.

Inflation is expected to return to the Bank of Ghana's target range of 8% plus or minus 2% by the end of 2026, while the estimated real neutral interest rate is around 5%.

This means the IMF does not currently see a strong need for monetary policy to become more accommodative.

Bank of Ghana changes how it manages liquidity

The IMF also noted changes being made by the Bank of Ghana to improve how money moves through the banking system.

In December 2025, the central bank replaced its 56 day bills with 14 day bills as part of efforts to improve liquidity management.

After the change, the supply of Bank of Ghana bills became more limited. This reduced the amount of excess money being absorbed from banks and increased the use of the standing deposit facility.

As a result, Bank of Ghana bill rates and interbank rates moved closer to the lower end of the central bank's interest rate corridor.

According to the IMF, this effectively loosened monetary conditions by about 350 basis points compared with the official policy rate.

Cash reserve rules also changed

In June 2026, the Bank of Ghana also changed its Cash Reserve Ratio requirements following advice from IMF staff.

The CRR is the portion of customer deposits that banks are required to keep with the central bank instead of lending out.

The Bank of Ghana introduced a single CRR of 20%, replacing the previous system where banks faced rates of either 15% or 25% depending on their loan to deposit ratios.

Banks were also required to meet their reserve requirements in cedis.

This reversed a May 2025 decision that allowed banks to meet the requirement in the same currency in which deposits were held.

The changes slightly increased the amount of liquidity being held by the central bank without earning interest.

What this means for investors

For investors, the IMF's position suggests that further large policy rate cuts may not happen as quickly as they did earlier in the easing cycle.

If the Bank of Ghana keeps the policy rate around current levels, interest rates on Treasury bills, bank deposits and loans could also remain relatively stable.

For the stock market, lower interest rates can normally make equities more attractive because returns on fixed income investments fall. However, the Bank of Ghana also has to balance that benefit against the risk of inflation returning or pressure building on the cedi.

The next decisions by the Monetary Policy Committee will therefore depend heavily on inflation, exchange rate movements, government spending and developments in global energy prices.