Dr. Johnson Asiama, Governor of the Bank of Ghana, announced that developments in the Middle East, including potential peace deals, will significantly influence Ghana’s inflation outlook. These international events will shape discussions at the upcoming Monetary Policy Committee (MPC) meeting. The Governor made these remarks during a meeting with heads of commercial banks.
This shift in the inflation outlook comes as Ghana's economy shows mixed signals. Headline inflation increased slightly to 3.7 percent in May 2026, up from 3.4 percent in April and 3.2 percent in March. This marks the first consecutive increase since December 2024. The Bank previously maintained the policy rate at 14 percent, believing risks to inflation and growth were balanced.
Ghana's fiscal performance remains strong, with a budget surplus of 0.1 percent of GDP in the first quarter of 2026. This exceeds program expectations. Despite these gains, elevated credit risk concerns persist within the banking sector. Banks must strengthen their credit underwriting standards to reduce non-performing loans, according to Dr. Asiama. The Governor reiterated that banks should focus on financial intermediation and supporting productive economic activity.
Dr. Asiama stated, "clearly, the outlook has now changed, and we are monitoring events in the coming days and weeks until the next meeting of the Monetary Policy Committee." He indicated these international developments would directly influence future policy decisions. He had previously told Bloomberg that a quicker normalisation of the situation in the Middle East could lead to an easing cycle for the policy rate.
The Bank of Ghana also amended its cash reserve requirement, setting a uniform ratio of 20 percent to be held in domestic currency. This directive took effect on June 4, 2026. The Chief Executive Officer of the Ghana Association of Banks, John Awuah, expressed concerns that this change could affect lending, credit costs, and deposits. However, Governor Asiama explained the decision aimed to enhance liquidity management and strengthen monetary policy transmission.
The Governor added that maintaining reserves in domestic currency will improve liquidity forecasting. It will also reduce operational complexities and support the deepening of the domestic financial market. This new framework provides a more predictable and equitable reserve management structure for financial institutions. It also preserves adequate liquidity buffers within the system. The next MPC meeting will closely evaluate these new influences to determine the next monetary policy direction.