Ghana’s Monetary Policy has faced sharp criticism, as the country closes 2024 with an inflation rate of 23%, a policy rate of 27%, and a cedi depreciation of 20%. Such outcomes have led many to question the effectiveness of Ghana Monetary Policy.
The Director of Research at the Institute of Economic Affairs (IEA), Dr. John Kwakye, described the figures as a glaring failure of monetary policy and called for a comprehensive reset of the framework.
Dr. Kwakye emphasized the need for the Bank of Ghana (BoG) to be more accountable in meeting its inflation and exchange rate mandates. This accountability is crucial for the success of Ghana Monetary Policy.
The central bank’s primary goal is price stability, targeting medium-term inflation of 8% within a ±2% band while fostering sustainable economic growth. Despite its operational independence and the use of inflation targeting as a key policy framework, Dr. Kwakye believes the BoG has fallen short in implementing effective Ghana Monetary Policy.
“Stabilizing prices and the exchange rate is simple practical economics—it is not rocket science,” he remarked in a post on X. He argued that the year-end statistics highlight the need for a policy overhaul to address persistent challenges.
Despite setbacks in 2024, Deloitte predicts brighter prospects for 2025, forecasting an average inflation rate of 11.9%. Factors such as a more stable cedi, easing domestic food prices, and waning supply-side pressures are expected to contribute to the decline. This potential improvement could be seen as a success for Ghana Monetary Policy if achieved.
Deloitte’s report, “Sneak Preview of 2025,” noted that Ghana’s inflation dropped in six of the 11 months of 2024, attributed in part to high interest rates. However, the 11-month average inflation of 22.85% remains far above the government’s target of 15% and significantly lower than the 2023 average of 40.28%.
While the projected decline in inflation for 2025 is encouraging, it still exceeds the Bank of Ghana’s target range of 8% ±2%. Some analysts have stressed the importance of policy reforms and sustained economic stability to achieve long-term price stabilization and exchange rate balance within the framework of Ghana Monetary Policy.
