Accra: The Monetary Policy Committee (MPC) of the Bank of Ghana has begun its 129th meeting to decide on the policy rate amid declining inflation and heightened global economic uncertainty.
According to Ghana News Agency, the three-day meeting, which began on March 16 and ends on March 18, will conclude with the announcement of the policy rate, the benchmark interest rate used by the central bank to influence borrowing costs, control inflation, and guide economic activity.
Dr. Johnson Pandit Asiama, Chairman of the MPC and Governor of the Bank of Ghana, opened the meeting in Accra, indicating that the Committee faced a complex policy decision despite improvements in key economic indicators. He noted that the decision environment contrasted with the relatively cautious stance adopted during the January MPC meeting.
Dr. Asiama mentioned that the meeting was not aimed at ratifying good news but rather making judgments under conditions that have become more encouraging, yet more uncertain. He highlighted that inflation had fallen to 3.3 percent in February, below the country's medium-term target band of six to ten percent, marking a significant reversal from crisis conditions experienced about two years ago.
The Governor also pointed out that Ghana's international reserves had increased to about US$14.5 billion, equivalent to 5.8 months of import cover, up from US$13.8 billion recorded at the January meeting. This improvement positioned Ghana more favorably to withstand potential external shocks.
Dr. Asiama noted that fiscal consolidation had exceeded expectations, with the country recording a primary surplus of 2.6 percent of Gross Domestic Product (GDP) at the end of 2025, compared with a deficit of 3.9 percent a year earlier. He mentioned that real sector activity had shown strong momentum, with the composite index of economic activity growing by 8.4 percent year-on-year at the beginning of 2026.
However, Dr. Asiama cautioned that the external environment had changed significantly since January 2026. He cited the escalation of conflict in the Middle East as a key concern, noting that it had disrupted major energy and shipping corridors and increased volatility in global oil markets. For Ghana, sustained oil price increases could raise the risk of imported inflation and potentially tighten global financial conditions.
The Governor also highlighted that geopolitical uncertainty could support gold prices and potentially strengthen Ghana's trade balance due to the country's reliance on gold exports. He pointed out that the net balance of risks from this external shock could be inflationary.
During its deliberations, the Committee would focus on four key areas: inflation developments, geopolitical risk channels, the Ghana Accelerated National Reserve Accumulation Policy (GANRAP), and the role of the banking sector in transmitting monetary policy. Dr. Asiama urged members to assess whether the current policy stance remained appropriate in the evolving macroeconomic environment and whether the low inflation rate provided room for policy accommodation.
He emphasized that external risks had become more pronounced compared with the situation in January 2026. Back then, the principal risk was complacency in the face of success, but now there is a live external threat to the disinflation trajectory.
Dr. Asiama also encouraged the Committee to consider policies supporting the country's ambition of raising international reserves to 15 months of import cover by 2028 under the Ghana Accelerated National Reserve Accumulation programme. He noted that the banking sector remained sound, profitable, and well-capitalized, with improving asset quality, though credit growth remained subdued.
The BoG Governor indicated the need to examine whether constraints to credit expansion were due to supply factors such as banks' risk appetite, capital requirements, and non-performing loan concerns, or weak borrower demand. He concluded by reminding members that central banking involved managing both crises and success, urging decisions to sustain the progress achieved through disciplined policy measures.