The Governor of the Bank of Ghana, Dr. Johnson Asiama, has admitted that inflation remains uncomfortably and stubbornly high at over 23% despite it easing.
According to him, the progress to tame inflation has been slow, particularly on a month-on-month basis.
For instance, he said at the beginning of the Monetary Policy Committee meeting that the structural drivers of food inflation remain persistent.
He added that the external environment, though currently supportive, is becoming increasingly volatile. “We’ve seen a strong trade surplus and solid reserve build-up on the back of gold exports and remittance flows. But a possible escalation in global tariff wars, rising geopolitical tensions, and weakening Chinese demand could quickly shift the dynamics”, he explained.
“These global factors could also have spillover effects on inflation, capital flows, and exchange rate stability”, he continued.
Domestically, Dr. Asiama said, the 2024 fiscal outturn was expansionary, with the deficit exceeding programme targets.
“We have seen encouraging signs of consolidation early in 2025, but questions remain as to whether current measures are adequate to anchor expectations and satisfy upcoming IMF programme reviews”.
He however stressed that financial conditions are evolving quickly, highlighting that liquidity in the system has increased, commercial banks have raised concerns about the Cash Reserve Ratio framework.
“We must carefully assess its macro-financial implications, especially with respect to inflation, foreign exchange demand, and credit growth”, he stated.
Continuing, Dr. Asiama said “We must also acknowledge that some of today’s challenges stem from earlier monetary and fiscal policy missteps, particularly loose fiscal policy during periods of macro stress, weak monetary-fiscal coordination, and delays in key structural reforms”.
According to him, these contributed to elevated inflation, impaired policy transmission, and a loss of credibility.
“It is essential that we reflect on these issues, not to assign blame, but to strengthen our institutions and avoid repeating past mistakes”, he concluded.
