The Governor of the Bank of Ghana (BoG), Dr. Johnson Asiama, has underscored the necessity for continued efforts to bring inflation down to desirable levels, despite recent progress in managing price stability.
Speaking at the conclusion of the 123rd Monetary Policy Committee (MPC) meeting, Dr. Asiama emphasized that while inflationary pressures have eased, policy vigilance remains crucial. He reiterated that future adjustments to interest rates will be dictated by economic developments, ensuring a balanced approach to monetary policy.
Inflation Trends and Policy Measures
Ghana’s inflation rate stood at 23.2% as of February 2025, marking a significant decline from the peak of 54.1% recorded in December 2022. This improvement has been largely attributed to stringent monetary policies, a stable foreign exchange market, and enhanced food supply conditions. However, inflation remains well above the central bank’s target range of 6–10%, necessitating additional interventions.
“The disinflation process is progressing, but inherent risks persist. To reinforce these gains, both monetary and fiscal prudence must be maintained, along with targeted measures to address supply-side bottlenecks that contribute to inflationary pressures,” Dr. Asiama stated.
In response to persistent inflationary concerns, the BoG has raised its benchmark policy rate by 100 basis points to 28.0%. This proactive measure is aimed at stabilizing inflation expectations and curbing secondary effects stemming from rising food and non-food prices.
Macroeconomic Performance and Fiscal Challenges
Despite inflationary concerns, Ghana’s economy demonstrated resilience in 2024, posting a robust GDP growth rate of 5.7%. This growth was primarily fueled by strong performances in the industrial and service sectors. However, inflationary pressures remained, exacerbated by supply chain disruptions, unfavorable weather conditions impacting agriculture, and fiscal imbalances.
On the fiscal front, the government’s budget deficit widened to 7.9% of GDP in 2024, far exceeding the projected target of 3.8%. This fiscal slippage contributed to excess liquidity in the economy, prompting the central bank to tighten monetary policy further in an effort to anchor inflation expectations and ensure macroeconomic stability.
Outlook and Policy Direction
Going forward, the Bank of Ghana says it remains committed to a data-driven approach in shaping its policy stance. With inflation still above the desired range, the central bank is expected to maintain a cautious yet responsive monetary policy framework to support price stability, economic growth, and overall financial stability.
