The Bank of Ghana (BoG) could activate the Monetary Policy Consultation Clause (MPCC) under the country’s International Monetary Fund (IMF) program if inflation continues to breach the central target of 18.0% ± 2%. This could lead to the invocation of the Monetary Policy Clause.
November 2024 inflation surged to 23%, with expectations of a marginal increase in December.
The MPCC is a mechanism outlined in Ghana’s IMF program that requires action if inflation deviates beyond specified outer bands, according to the Monetary Policy Clause.
According to IC Research, the upper threshold for inflation under the current target is 22.0%. Exceeding this limit would necessitate consultations with the IMF Board and prompt Ghanaian authorities to implement corrective measures under the Monetary Policy Clause.
IC Research noted that the BoG has already taken preemptive steps, including aggressive foreign exchange interventions, to mitigate inflationary pressures and stabilize the economy. “The Bank of Ghana’s FX sales aim to leverage currency appreciation to keep inflation below the 22.0% threshold by the end of 2024,” the research update stated.
The sharp rise in headline inflation—up 90 basis points to 23.0% year-on-year in November—was primarily driven by escalating food prices, which overshadowed modest reductions in non-food inflation. Rising costs of staples such as maize and rice have intensified pressure on households and businesses, reflecting persistent supply chain inefficiencies. Analysts had anticipated a slight decline in inflation during the month, but the continued surge underscores the challenge of tackling entrenched price pressures effectively and sustainably nationwide.
Should the MPCC be triggered, it would mark a critical juncture in Ghana’s monetary policy framework under the IMF program, enforcing the Monetary Policy Clause. The consultations and subsequent measures could influence the country’s inflation trajectory and broader economic stability in the months ahead, requiring coordinated monetary and fiscal policy actions.
