Interest Rates: Why Bank of Ghana Is Refusing to Make Further Cuts Despite Falling Inflation

The Bank of Ghana (BoG) has maintained a cautious monetary policy approach to protect the progress made in reducing inflation while managing emerging economic risks at both the domestic and international levels.

The Governor of the Bank of Ghana, Dr Johnson Asiama, explained that the decision to temporarily halt monetary policy easing was necessary to prevent a resurgence of inflationary pressures and sustain recent economic gains.

Addressing Parliament’s Committee on Economy and Development on Friday, November 6, Dr Asiama said the first half of 2026 recorded significant progress in economic stabilisation, allowing the central bank to reduce its policy rate as inflation declined.

However, emerging domestic and external uncertainties made it necessary to pause further reductions.

He noted that the monetary policy measures had contributed to sustained economic growth, declining interest rates and improved access to credit for businesses in the private sector.

Ghana also recorded improvements in its external sector balances, while the banking industry continued to demonstrate resilience.

The Bank’s cautious approach was reflected in the Monetary Policy Committee’s decision to maintain the policy rate at 14 per cent between May and September 2026.

At its September meeting, most committee members supported keeping the rate unchanged, citing growing external uncertainties and concerns about potential increases in inflation.

Dr Asiama indicated that subsequent economic developments had further justified the decision to maintain a careful and data-driven monetary policy approach.

Meanwhile, Ghana’s inflation rate increased for the third consecutive month, reaching 5.5 per cent in October 2026, compared with 5.2 per cent in September and 9.4 per cent in October 2025.

The latest figure represents the highest inflation rate recorded in 11 months, although it remains below the Bank of Ghana’s medium-term target range of 6 to 10 per cent.

The central bank governor identified fluctuations in international oil prices, exchange rate movements and domestic price adjustments as some of the major factors that could threaten the country’s inflation outlook.

He assured that the Bank would closely monitor these developments and implement appropriate measures when necessary to maintain price stability.

Dr Asiama also reaffirmed the central bank’s commitment to strengthening the effectiveness of monetary policy through improved liquidity management, a transparent foreign exchange framework, increased international reserve accumulation and reforms aimed at restoring the Bank’s financial position.

Source: https://www.citinewsroom.com/2026/11/were-adopting-a-cautious-policy-stance-to-protect-inflation-gains-bog/

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