The Bank of Ghana has opened its 124th Monetary Policy Committee (MPC) meeting with cautious optimism as macroeconomic conditions show early signs of stabilisation.
Speaking at the opening session held at the Bank Square in Accra, Governor Dr. Johnson Asiama acknowledged recent gains while warning of persistent risks that could derail progress.
Dr. Asiama highlighted the role of recent policy interventions in taming inflation, which dropped to 21.2 percent in April 2025 according to the Ghana Statistical Service. While this marks a decline from earlier peaks, inflation remains well above the Bank’s medium-term target of 8 ± 2 percent and exceeds the 19 percent upper consultation band.
“The inflation path has been shaped by a combination of monetary tightening, relative exchange rate stability, and easing non-food inflation,” the Governor stated. He pointed to the MPC’s March decision to raise the policy rate by 100 basis points to 28 percent as a contributing factor in slowing inflationary pressures.
The cedi has also seen a marked recovery, appreciating nearly 19 percent between April and May. Dr. Asiama attributed the appreciation to improved market sentiment, sound monetary policy, and gains in the external sector, noting its impact on reducing imported inflation and restoring public confidence.
In a sign of broader macroeconomic improvement, Ghana recently reached a Staff-Level Agreement with the International Monetary Fund (IMF) on the Fourth Review of its Extended Credit Facility (ECF) programme. Although some prior actions remain pending, the outlook appears positive, bolstered by a recent credit rating upgrade from S&P Global Ratings—from “Selective Default” to “CCC+.”
Further encouraging developments include strengthened external reserves, an improved trade balance, and rising consumer and business confidence. Despite these gains, the Governor cautioned against complacency.
“Significant challenges persist,” he warned, citing vulnerabilities such as second-round inflation effects, food supply constraints in northern Ghana and the Sahel, and external price shocks driven by volatile global commodity markets and ongoing geopolitical tensions.
Against this backdrop, the central bank has begun reviewing its monetary policy implementation framework. A shift is underway from reliance on the unremunerated Cash Reserve Ratio towards more active Open Market Operations, including the deployment of longer-tenor Bank of Ghana instruments.
“This is intended to enhance policy transmission, improve liquidity management, and allow greater room for credit expansion to the private sector,” Dr. Asiama explained.
As the Committee deliberates on the path forward, key considerations include the sustainability of the cedi’s appreciation, the durability of renewed market confidence, and the implications for inflation forecasting.
Dr. Asiama also underscored the importance of clear communication. “Our post-meeting communiqué must provide an accessible, transparent account of recent economic trends and the rationale behind our policy decisions. This is essential for anchoring expectations and sustaining public trust in our commitment to price stability,” he said.
The 124th MPC meeting is expected to conclude with a formal announcement on the policy rate and broader monetary stance in the coming days.
