Governor of the Bank of Ghana, Dr Johnson Pandit Asiama, says Ghana’s early macroeconomic recovery is the result of decisive monetary policy action and improving fundamentals.
Speaking at the 124th Monetary Policy Committee (MPC) meeting in Accra, he attributed the drop in inflation to 21.2% last month to the March policy rate hike to 28%, exchange rate stability, and easing non-food inflation.
“Preliminary evidence suggests that this action has contributed to dampening inflation momentum and, importantly, the cedi has appreciated by nearly 19 per cent between April and May,” Dr Asiama noted. “This has helped ease imported inflation and restore public confidence.”
The cedi’s appreciation, he said, reflects improved market sentiment, external gains, and prudent policy. From March 12 to May 12, the cedi strengthened from GH¢15.53 to GH¢13.09 per dollar, with similar gains recorded against the euro and pound.
Though optimistic, Dr Asiama acknowledged the recovery remains fragile. “There are encouraging signs of progress, but the path ahead is complex and fraught with risks, both global and domestic,” he said.
The Governor cited the recent IMF staff-level agreement on the fourth review of the Extended Credit Facility and Ghana’s credit rating upgrade by S&P to CCC+ as signs of progress. He also highlighted stronger reserves, a better trade balance, and growing business confidence.
However, food supply constraints, external price shocks, and geopolitical tensions could reverse gains, he warned. “While the inflation outlook is improving, it remains vulnerable to second-round effects.”
The central bank, he said, is reviewing its monetary framework to reduce reliance on unremunerated cash reserve ratios and transition to active open market operations using longer-tenor instruments. The goal is to improve liquidity management and credit availability.
Dr Asiama concluded by urging the MPC to weigh the adequacy of current policies to maintain disinflation without undermining growth. “The credibility of the MPC hinges on our ability to respond decisively and proportionately to evolving economic realities.”
