Accra: Bank of Ghana Governor Dr. Johnson Pandit Asiama, on Sunday, participated in the Kwahu Business Forum Governor's Roundtable session to discuss economic development and its impact on the business community. Governor Asiama used the occasion to reflect on the country's economic progress in 2025, highlighting the difficult policy decisions central banks face globally. Touching on inflation, which is of particular interest to the business community, Dr. Asiama explained that the current low inflation rate had come at a huge cost to the central bank.
According to Ghana Web, Dr. Asiama emphasized the unique position of central banks and the trade-offs influencing their decisions, stating, "The cedi is stable and under control." He elaborated on the importance of balancing growth and inflation policies, acknowledging the positive impact of strong macroeconomic performance in 2025, but noted the associated costs to the central bank. "Last year was good but expensive for the central bank. It took us a lot of money to mop up excess liquidity and bring inflation down to 5.4 percent by December 2025," he stated.
Dr. Asiama further explained that the central bank's monetary operations aimed to drain excess liquidity, and while the cost was high in 2025, he is confident that 2026 will be different. "If you look at where inflation was at the end of December 2024 and where it is now, it won't involve the same level of resources to keep it low and stable going forward," he assured.
He concluded by emphasizing the importance of collaboration and assuring the business community of the central bank's commitment to strengthening the markets. "When banks are strong, they can give more credit," he added. The core mandate of the central bank is to maintain economic stability through inflation control, ensuring it remains low and stable, which facilitates economic growth.
The costs associated with mopping up excess liquidity often impair the central bank's balance sheet, with BoG bills being particularly costly. Similar challenges are faced by other central banks, such as the US Federal Reserve and the European Central Bank.
A review of the 2025 inflation rate reveals a significant drop from 23.8% at the end of December 2024 to 5.4% by the end of December 2025. This substantial reduction was not without cost, as highlighted in the last Monetary Policy Committee press briefing, where the Governor noted a significant increase in the cost of Open Market Operations during 2025.
Despite the high costs, central banks cannot remain passive, allowing inflation to erode citizens' disposable incomes. Looking ahead, Governor Asiama is optimistic that the costs incurred in 2025 will not be repeated in 2026 due to the current low and stable inflation environment. With inflation reduced by 18.4 percentage points in 2025 and now below 4 percent, maintaining stability in 2026 is expected to be less challenging.