The Bank of Ghana’s Monetary Policy Committee (MPC) has kept the policy rate at 14 percent. This decision comes as geopolitical tensions in the Middle East continue to pose significant risks to Ghana’s inflation outlook and overall economic stability.
Bank of Ghana Governor Johnson Pandit Asiamah stated the Middle East crisis is the 'elephant in the room'. He said this during the 130th MPC press briefing in Accra. The central bank chose a cautious approach, monitoring global developments despite some positive local economic signs. This uncertainty prevents an immediate easing of monetary policy.
This fits into Ghana’s broader economic narrative of balancing domestic growth with external shocks. The Bank of Ghana aims to prevent a return to high inflation seen in previous years. Data shows Net International Reserves increased from US$10.9 billion in April to US$12.43 billion currently. This provides a buffer against external shocks and helps manage currency stability.
Governor Asiamah explained that real interest rate trends suggested room for rate cuts. However, the MPC considered both local improvements and global challenges. He assured that the central bank would evaluate all new data. The committee will make an appropriate decision at its next meeting.
The central bank expects ongoing Middle East conflicts to impact inflation expectations. This could lead to a second round of price increases. Therefore, the MPC decided to pause and assess the situation carefully. The Governor confirmed future meetings with commercial bank CEOs to discuss new policies.
The Bank of Ghana also revised the dynamic cash reserve ratio to a uniform 20 percent reserve requirement. This new rule applies to domestic currency, effective June 4, 2026. This measure aims to complement the central bank’s open market operations. It helps manage liquidity within the banking system.
Governor Asiamah addressed the slow reduction in commercial bank lending rates. He explained that a low-interest-rate environment is new for banks. They need time to adjust their loan portfolios. This cautious approach helps banks avoid excessive credit risks. Lending rates should eventually decrease as the low-interest-rate environment continues.
He also spoke about the cedi's depreciation. Governor Asiamah clarified that Ghana uses a managed floating exchange rate system. The cedi is expected to move, either depreciating or appreciating. The central bank focuses on avoiding excessive volatility. Increased demand for foreign exchange due to higher crude oil prices and dividend repatriations caused recent depreciation pressures. The Bank of Ghana has sufficient foreign exchange reserves to maintain market stability.
The central bank is also advancing plans for a new digital credit framework. This framework will allow individuals and businesses to get small loans via mobile phones. It aims to broaden access to credit under a secure, regulated system. Moreover, Ghana may see its first non-interest banking institution launch this year. The regulatory framework for this is being carefully developed.