The Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) has increased the Policy Rate from 27 per cent to 28.
Governor of the Bank of Ghana Dr Johnson Asiama said during the 123rd MPC press conference in Accra that the global environment has become more challenging.
The disinflation process appears to have stalled in some countries
“On the domestic scene, he said earlier indications point to improved growth prospects,” he said.
He also stated that both consumer and business confidence have improved.
“By a majority decision, the committee 100 basis points to 28 per cent,” he said.
During the opening day of the sitting, Dr Asaiama said that while inflation is easing, it remains uncomfortably high, at over 23%.
He noted that progress has been slow, particularly on a month-on-month basis.
For instance, he said, structural drivers of food inflation remain persistent. He also stated 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. These global factors could also have spillover effects on inflation, capital flows, and exchange rate stability,” Dr Asiama said during the 123rd sitting of the MPC on Monday, March 24.
Domestically, Dr Asiama said, the 2024 fiscal outturn was expansionary, with the deficit exceeding program 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 program reviews.”
He also notes that financial conditions are evolving quickly. Liquidity in the system has increased, commercial banks have raised concerns about the Capital Requirements Regulations (CRR) framework, and “we must carefully assess its macrofinancial implications—especially with respect to inflation, foreign exchange demand, and credit growth.”
While private sector credit is recovering in nominal terms, real credit growth remains modest, he said.
“Banks are still cautious, and Non-Performing Loan (NPL) levels remain a concern. Meanwhile, our microfinance and rural banking sectors are showing early signs of stability, but recapitalization and regulatory reforms must continue to preserve confidence.
“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. 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.”
Dr Asiama also that there are also deeper, structural issues we must not lose sight of—such as underinvestment in agriculture, persistent exchange rate misalignments, and the need to deepen domestic financial markets.
These are outside the scope of today’s immediate rate decision, but they will shape the broader monetary policy landscape over the medium term, he said.
In short, he added “we are facing a convergence of risks: stubborn inflation, elevated liquidity, soft real interest rates, a fragile fiscal recovery, and growing external uncertainty. But we also have buffers—strong reserves, improving sentiment, and the credibility of our policy framework—to guide us.
“Our task over the next few days is to weigh these developments rigorously, and to reach a policy stance that reinforces the disinflation path without undermining the recovery or destabilizing market expectations. I trust that our discussions will be candid, evidence-based, and guided by our shared mandate of maintaining price stability and supporting sustainable growth.
