BoG urges caution in lending rate adjustments

Governor of the Bank of Ghana (BoG), Dr. Johnson Pandit Asiama, has called on banks to act with prudence in adjusting lending rates, urging financial institutions to maintain open and transparent communication with clients amid macroeconomic shifts.
Speaking at the maiden post-Monetary Policy Committee (MPC) meeting with Chief Executive Officers of banks in Accra, Dr. Asiama emphasized the importance of supporting viable businesses while exploring tailored solutions to cushion the most vulnerable sectors of the economy.

Reinforcing disinflation efforts
The Monetary Policy Committee recently raised the policy rate by 100 basis points to 28%, a decision Dr. Asiama said was intended to accelerate the disinflation process.
While acknowledging that disinflation was underway, he noted it remained too gradual to ensure lasting price stability.
“These engagements with CEOs are central to ensuring a mutual understanding of policy direction and alignment in our collective efforts to foster macroeconomic stability and recovery,” the Governor said.

Concerns remain
Despite headwinds, the Governor pointed to broad-based improvements in financial stability, attributing gains to the Domestic Debt Exchange Programme (DDEP), stronger bank profitability, increased liquidity, and ongoing recapitalisation efforts.
He cited data showing continued asset growth in the sector, which expanded by 34.05% year-on-year as of February 2025, fueled primarily by deposits, which also rose by 27.89%.
The Banking Sector Soundness Indicator (BSSI) showed sustained improvement, underpinned by gains in solvency and asset quality.
Most banks remained above the regulatory Capital Adequacy Ratio (CAR) threshold of 10%, with the industry average at 14.35%.
However, Dr. Asiama flagged solvency concerns for a few domestically controlled and state-owned banks, where recapitalisation efforts remained unclear.
He stated that addressing these capital shortfalls remained a key priority for the BoG.
“We are working closely with the affected institutions to achieve sustainable capital levels, restore depositor confidence and ensure compliance with regulatory requirements,” he assured.

Call for stronger risk frameworks and innovation
In response to increasing credit risks, Dr. Asiama urged all banks to enhance their risk management frameworks, including improvements in underwriting standards, early warning systems, and provisioning practices.

The BoG also expects banks to strengthen loan origination, monitoring, and credit review systems to mitigate risk and maintain stability.
Beyond risk, the Governor encouraged strategic partnerships, digital transformation, and product innovation to keep the industry competitive.
He added that the BoG was deepening its engagement with non-bank financial service providers to ensure innovation thrived within a well-supervised ecosystem that promotes financial inclusion and consumer protection.
As the central bank tightens its oversight, Dr. Asiama reiterated BoG’s commitment to working collaboratively with banks to navigate economic uncertainties and build a resilient and inclusive financial sector for Ghana.