The Bank of Ghana’s Monetary Policy Committee (MPC) has voted unanimously to maintain the policy rate at 28.0 percent, citing sustained disinflation a
The Bank of Ghana’s Monetary Policy Committee (MPC) has voted unanimously to maintain the policy rate at 28.0 percent, citing sustained disinflation and strengthening macroeconomic conditions.
The announcement follows the MPC’s 124th regular meeting, where members reviewed both global and domestic economic developments as well as inflation and growth prospects.
Global Headwinds Temper Optimism
On the global front, the first four months of 2025 have presented a challenging landscape marked by low growth forecasts, fragmented progress on disinflation, and tight financial conditions.
A major source of uncertainty has been the shift in U.S. trade policy, particularly new tariffs that have triggered retaliatory actions from trade partners.
These developments have dampened investor sentiment and increased the risk of further global economic slowdown.
Central banks across the world have responded in varying ways. While some economies have extended their tightening cycles due to lingering inflation, others have started cutting policy rates as inflation approaches target levels.
Domestic Economy Shows Signs of Recovery
Amid global uncertainty, Ghana’s economy is showing signs of resilience.
According to high-frequency indicators, economic activity continues to recover steadily.
The Composite Index of Economic Activity grew by 2.3 percent year-on-year in March 2025, up from 1.0 percent in March 2024. Key drivers included higher exports, increased private sector credit, and robust construction activity.
The Ghana Purchasing Managers’ Index (PMI) rose above the neutral 50-point threshold, indicating business expansion due to growth in new orders and output.
Consumer and business confidence reached their highest levels in seven years, buoyed by easing inflation and improved macroeconomic outlook.
Inflation Slows Further
Headline inflation in Ghana has now declined for four consecutive months, falling by 2.6 percentage points to 21.2 percent in April 2025.
Both food and non-food categories contributed to the decline. Contributing factors include a tight monetary policy, consistent liquidity management, lower fuel prices, and a stabilised exchange rate.
The central bank’s core inflation metric, which excludes volatile energy and utility prices, also showed signs of easing. Inflation expectations across consumers, businesses, and the financial sector appear to be stabilising.
Fiscal and External Accounts Improve
On the fiscal side, the government appears to be on track with the 2025 national budget. Although revenue fell short in the first quarter, expenditure rationalisation efforts helped narrow the gap. Ghana’s primary fiscal balance on a commitment basis has improved, reflecting ongoing fiscal discipline.
The country’s public debt stock stood at GH¢769.4 billion at the end of March 2025, representing 55.0% of GDP—down from GH¢726.7 billion or 61.8% of GDP at the end of 2024.
This suggests a combination of GDP growth and debt consolidation is reducing debt vulnerability.
Ghana’s external sector has performed strongly. The country recorded a provisional current account surplus of US$2.1 billion in the first quarter, thanks to higher commodity prices and export volumes—particularly in gold and cocoa—along with resilient remittance inflows.
The overall balance of payments registered a US$1.1 billion surplus, helping Ghana’s gross international reserves reach US$10.7 billion, equivalent to 4.7 months of import cover.
Cedi Appreciation
One of the more remarkable developments is the performance of the Ghanaian cedi. It appreciated by 24.1% against the US dollar, 16.2% against the British pound, and 14.1% against the euro between January and May 21, 2025.
The appreciation is attributed to a combination of tight monetary policy, stronger reserves, enforcement of foreign exchange rules, and renewed investor confidence.
Forward Guidance and Additional Measures
Looking ahead, the Bank of Ghana expects inflation to decline more rapidly than previously projected. Barring unforeseen shocks, the inflation target could be achieved as early as Q1 2026.
Despite these positive indicators, the MPC emphasized that inflation remains well above the medium-term target.
The committee thus opted to maintain the 28.0% policy rate to sustain the disinflation momentum.
In a further move to enhance monetary policy transmission, the Bank announced a change to the Cash Reserve Ratio (CRR) framework.
Beginning June 5, 2025, banks will be required to maintain reserves in the same currency as the deposits—foreign currency reserves for foreign currency deposits and cedi reserves for cedi deposits.
What’s Next
The next Monetary Policy Committee meeting is scheduled for July 21–25, 2025.
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