The Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) has maintained the policy rate at 14% after its 131st MPC Meeting.
The announcement was made by the Governor of the BoG, Dr. Johnson Pandit Asiama, on Wednesday afternoon. This is the second time the MPC has maintained the policy rate due to rising geopolitical tensions in the Middle East that threaten to reverse recent gains in inflation despite strong domestic economic performance.
Announcing the decision, Dr. Johnson Asiama said the Committee unanimously agreed to maintain the policy rate, judging that the current monetary policy stance remains appropriate to steer inflation into the central bank’s medium-term target while allowing policymakers time to assess evolving global risks.
The decision comes against the backdrop of renewed conflict in the Middle East, which has disrupted global trade routes, pushed crude oil prices above US$85 per barrel, and increased uncertainty in international energy markets.
According to the Governor, these developments have slowed the pace of global disinflation and prompted many central banks around the world to pause their interest rate cuts amid growing inflation concerns.
Although Ghana’s inflation rose to 5.3% in June from 3.7% in May, the MPC noted that the increase was largely driven by temporary factors, including base effects and a short-lived increase in transport fares following the surge in global oil prices. Inflation, the Committee observed, remains below the lower end of the Bank’s medium-term target band.
The Committee also acknowledged that inflation expectations and core inflation had edged higher but remain broadly anchored, with the Bank’s latest forecasts indicating that inflation will gradually move back into the target range.
Beyond inflation, the MPC cited the resilience of Ghana’s economy as another reason for maintaining the current policy stance.
Economic activity strengthened in the first quarter, with real GDP expanding by 6.4%, supported by robust growth in the services and industrial sectors. The Bank’s Composite Index of Economic Activity also recorded strong expansion, while business and consumer confidence improved on the back of subdued inflation and declining lending rates.
The Committee further noted that lower borrowing costs have translated into stronger private sector lending, with credit to businesses growing by 41.2% in June compared with 8.6% a year earlier, suggesting that financial conditions are already supporting economic activity.
