Ghana’s benchmark reference rate for bank lending has witnessed its steepest monthly decline this year, offering a rare boost for businesses and consumers entering the final month of 2025.

Fresh data from the Ghana Association of Banks shows the Ghana Reference Rate (GRR) fell sharply from 17.93% in November to 15.9% in December, a notable 200-basis-point drop driven by improvements across key macroeconomic indicators that feed into the benchmark formula.

Bank treasurers attribute the decline largely to the Bank of Ghana’s recent 350-basis-point cut in the Monetary Policy Rate (MPR) to 18%, alongside moderating Treasury bill yields and easing interbank market rates – all of which helped pull the GRR downward.

The December rate shift is expected to reduce borrowing costs across the banking sector, with commercial banks likely to adjust their lending rates downward over the month.

Loans contracted in December will be benchmarked against the new GRR, meaning new borrowers should face noticeably lower interest charges relative to November.

Borrowers on fixed-rate facilities will see no changes, but those with variable-rate loan agreements may experience marginal downward adjustments depending on their bank’s pricing methodology.

The decline comes at a crucial time for businesses still grappling with a tight credit environment. Liquidity constraints – a consequence of sustained monetary tightening aimed at taming inflation and stabilising the cedi have made loan access increasingly difficult, particularly for SMEs.

However, the Bank of Ghana’s latest Monetary Policy Report suggests a gradual easing: average lending rates have already dropped from 26.6% to 24.2%, signalling early signs of improved credit conditions.

Analysts note that while the GRR decline will not instantly translate into cheap credit across all banks, it marks a significant turning point after months of contractionary policy.

The coming weeks will indicate how swiftly banks recalibrate their loan pricing structures and how strongly borrowers respond.

With the cost of capital now on a downward path, December may offer the most favourable lending conditions businesses have seen all year.