The Monetary Policy Committee (MPC) of the Bank of Ghana has maintained the policy rate at 28 per cent, citing the need to consolidate gains made in controlling inflation and supporting currency stability.
Speaking at a media briefing in Accra last Friday, the Governor of the Bank of Ghana, Dr Johnson Asiama, said the decision was driven by the central bank’s latest forecast, which indicated a continued easing of inflationary pressures, supported by a tight monetary policy stance, relative exchange rate stability, and ongoing fiscal consolidation.
Headline inflation fell to 21.2 per cent in April 2025, representing a 2.6 percentage point drop from the beginning of the year. Dr Asiama attributed the decline to a mix of tight monetary policy, enhanced liquidity management, reduced ex-pump petroleum prices, and a stable cedi.
“Inflation is expected to ease faster towards the medium-term target in the first quarter of 2026 as opposed to the second quarter as earlier envisaged, barring unanticipated shocks,” Dr Asiama noted, adding that the Bank is targeting an end-of-year inflation rate of 12 percent.
Despite the progress, the MPC said the current inflation level remains above target and emphasised the importance of holding the policy rate steady to reinforce the ongoing disinflation process.
“Under the circumstances, the Committee, by a unanimous decision, maintained the policy rate at 28.0 percent,” the Governor said.
Dr Asiama also highlighted the cedi’s strong performance as a key development. The local currency, which had faced persistent pressure in previous years, has appreciated significantly in 2025. As of May 21, it had gained 24.1 per cent against the US dollar, 16.2 per cent against the British pound, and 14.1 per cent against the euro.
This resurgence, the Governor explained, has been driven by tight monetary policy, improved market sentiment, record foreign exchange reserves, fiscal discipline, and stronger regulatory oversight of the forex market.
He also pointed to continued improvements in the external sector, including a provisional current account surplus of US$2.1 billion in the first quarter of 2025, largely due to higher gold and cocoa prices, rising export volumes, and robust remittance inflows.
This, he said, helped to generate a balance of payments surplus of US$1.1 billion, while Gross International Reserves rose to US$10.7 billion by April 2025, equivalent to 4.7 months of import cover.
The Bank of Ghana said it will remain vigilant and committed to maintaining macroeconomic stability while ensuring the disinflation process is sustained over the coming quarters.