The Monetary Policy Committee (MPC) of the Bank of Ghana begins its first meeting of the year today to assess the performance of the economy and set the policy rate. However, the rate is not expected to change, as analysts predict it will remain at 27%, the same level maintained during the last meeting in November 2024.
This meeting could mark the final one for the current Governor of the Bank of Ghana, Dr. Ernest Addison, whose term ends in March. As Chair of the MPC, his tenure has overseen the country’s monetary policies during a time of economic volatility. Dr. Addison’s potential departure might influence the committee’s decision to hold off on making significant adjustments, reserving such decisions for his successor.
During the meeting, the MPC will review key economic developments, including rising inflation and currency depreciation. Ghana’s inflation rate ended 2024 at 23.8%, well above the government’s target of 15% and the Bank of Ghana’s target of 18%. Additionally, the cedi, which experienced relative stability in late 2024 due to the Bank of Ghana’s regular injections of dollars, has started losing value in the past week. The cedi began 2025 at around GH¢14.75/ GH¢14.82 levels against the US dollar but has since depreciated to GH¢15.10/ GH¢15.15 by Wednesday, January 22.
Despite these economic challenges, many analysts believe the MPC will keep the policy rate unchanged for several reasons. First, with the current governor nearing the end of his term, there may be a preference to leave any significant policy adjustments to the incoming governor. Second, aligning the monetary policy with the fiscal plans of the new government is crucial. The full 2025 budget is expected to be presented in March, and it may be prudent for the MPC to wait for the government’s economic strategies before making any major policy decisions.
Additionally, while inflation and the depreciation of the cedi are concerning, they are not yet considered alarming enough to warrant an increase in the policy rate. Many argue that the current rate of 27% is already high, limiting access to credit for the private sector, and raising it further could hinder economic recovery.
The MPC will conclude its meeting on Friday, January 24, with the outcome expected to be announced either on the same day or during a media briefing on Monday. Meanwhile, the rise in the dollar could further exacerbate the falling value of the cedi, contributing to the rising costs of goods and services in Ghana—a critical factor the MPC may consider in its decision-making process.
