Middle East tensions threaten Ghana’s inflation gains – BoG

The Governor of the Bank of Ghana, Dr. Johnson Pandit Asiama has cautioned that escalating geopolitical tensions in the Middle East could undermine Ghana’s hard-won gains in inflation control, even as the economy shows strong signs of recovery.

Speaking at the 129th Monetary Policy Committee (MPC) meeting, Dr. Asiama warned that developments in the Middle East are already disrupting global economic conditions, with potential spillover effects for Ghana.

According to the Governor, the escalation of conflict in the Middle East is affecting key global energy and shipping routes, creating fresh uncertainty in international markets.

“A significant external development has entered the picture… the escalation of the conflict in the Middle East is disrupting key energy and shipping corridors,” he stated.

He explained that the situation is increasing volatility in global oil markets and complicating the global inflation outlook, raising concerns for policymakers in emerging economies like Ghana.

Dr. Asiama noted that Ghana remains vulnerable to these external shocks through the import channel, particularly via rising energy prices.

“For Ghana, the transmission channels are clear. Sustained oil price increases could raise the risk of imported inflation and could also tighten global financial conditions,” he warned.

The caution comes at a time when Ghana has achieved a significant decline in inflation, with recent data showing a drop to 3.3 percent in February 2026, following a prolonged period of high inflation above 20 percent just a year earlier.

The Governor stressed that these gains, though encouraging, remain fragile and could be reversed if external pressures intensify.

Despite the risks, Dr. Asiama pointed to one potential offset—rising geopolitical uncertainty often drives up global gold prices, which could benefit Ghana as a major gold exporter.

“Geopolitical uncertainty tends to support gold prices… This could benefit our trade balance,” he noted.

However, he cautioned that the overall balance of risks remains tilted toward inflation, particularly if oil prices continue to rise.

Dr. Asiama indicated that the Monetary Policy Committee will take these global developments into account as it deliberates on the appropriate policy stance, including whether to adjust the policy rate.

He emphasised that while Ghana’s macroeconomic indicators—including inflation, reserves, and growth—have improved significantly, policymakers must remain cautious in the face of evolving global uncertainties.

“The Committee must weigh both the progress achieved and the risks that remain,” he said.

The warning highlights the challenge facing the Bank of Ghana as it transitions from stabilising the economy to sustaining that stability.

With inflation at historic lows, reserves strengthening, and economic activity picking up, the central bank now faces the task of protecting these gains against external shocks.