Ghana Reference Rate climbs to 10.59% in July

The Ghana Reference Rate (GRR), the benchmark used by banks to price loans, rose to 10.59% in July, up from 10.02% in June, according to figures published by the Ghana Association of Banks on July 1.

The GRR is calculated from three inputs: Treasury bill rates, the interbank rate, and the Bank of Ghana’s Monetary Policy Rate.

Industry data points to two key drivers behind the increase; the rise in the 91-day Treasury bill rate and the Bank of Ghana’s decision to raise the Cash Reserve Ratio (CRR) from 15% to 20%.

Previously, banks operated under a tiered CRR system with 15% as the floor. That system has now been scrapped, with every bank facing a flat 20% requirement regardless of its loan-to-deposit ratio.

Bank of Ghana Governor, Dr Johnson Asiama told bank CEOs the move is intended to tighten liquidity management and help stabilize the cedi.

Commercial banks may respond by raising lending rates, though borrowers on fixed-rate loans will not be affected. Businesses with strong credit profiles may also see little change in borrowing costs.

Analysts, however, warn of further pressure ahead. A possible increase in the Monetary Policy Rate driven by global market volatility linked to Middle East tensions could push borrowing costs even higher.

The GRR sets the benchmark for loan pricing across Ghana’s banking sector.

Businesses are already facing tight credit conditions as the Bank of Ghana leans on liquidity controls to manage inflation and support macroeconomic stability.

Despite July’s uptick, the GRR has generally trended downward this year. 15.58% in January, 14.58% in February, 11.71% in March, 10.06% in April, 10.03% in May, and 10.02% in June, before rising again in July.

The Bank of Ghana introduced the GRR in 2017 in collaboration with the Ghana Association of Banks to provide a transparent benchmark for lending rates across the sector.

DR/SA