Ghana’s Economy Showing Early Signs of Stability -BoG Governor

Governor of the Bank of Ghana, Dr. Johnson Asiama, spoke at the 124th Monetary Policy Committee (MPC) meetings. He noted early signs of stability in Ghana’s economy due to recent policy changes. However, he warned that significant risks still exist.

Dr. Asiama mentioned improving macroeconomic indicators but stressed the recovery path is complex. It remains vulnerable to domestic and global shocks. “We convene at a time when Ghana’s macroeconomic conditions are stabilizing,” he said.

He highlighted a key indicator: inflation moderation. According to the Ghana Statistical Service, inflation dropped to 21.2% in April 2025. This decline is notable but still above the target range of 8 ± 2%.

In March, the MPC raised the policy rate by 100 basis points to 28%. Dr. Asiama stated this action has started to reduce inflationary pressures. “Preliminary evidence suggests this action has contributed to dampening inflation momentum,” he added.

The cedi appreciated nearly 19% between April and May. This improvement was supported by better market sentiment and prudent monetary policy. “This appreciation has helped ease imported inflation pressures,” explained Dr. Asiama.

He also discussed broader economic progress, including an agreement with the IMF on the Fourth Review of the Extended Credit Facility Programme. Additionally, S&P upgraded Ghana’s sovereign rating from Selective Default to CCC+.

“These developments affirm our progress,” he said, noting stronger external reserves and improved trade balance. Consumer and business confidence are also rising.

Despite these gains, Dr. Asiama cautioned about persistent risks ahead. Inflation could be affected by food supply issues from northern Ghana and geopolitical tensions globally.

He mentioned U.S.-led tariff disputes as potential disruptors for financial flows into emerging markets. To enhance monetary policy transmission, the Bank of Ghana is shifting its approach.

They will move from relying on unremunerated Cash Reserve Ratio to more active Open Market Operations using longer-tenor instruments.

The governor emphasized upcoming decisions are crucial for maintaining disinflation without harming fragile recovery efforts. He concluded by stressing clear communication in their post-meeting communiqué.

“It must explain our policy decisions clearly and transparently,” he stated.