Accra: The Governor of the Bank of Ghana, Dr. Johnson Pandit Asiama, has defended the decision by the Monetary Policy Committee (MPC) to maintain the policy rate at 14 percent, citing geopolitical tensions in the Middle East as significant risks to Ghana's inflation outlook and economic stability.
According to Ghana Web, Dr. Asiama addressed questions from journalists during the 130th MPC press briefing, emphasizing the ongoing Middle East conflict as a key factor in the central bank's cautious policy stance. Despite indicators suggesting potential for monetary easing, the MPC opted to pause and observe global developments due to uncertainties surrounding the crisis.
Dr. Asiama noted that while current real interest rate trends might support further rate cuts, the MPC considered domestic and external factors before reaching its decision. The Governor also addressed the slow reduction in commercial bank lending rates, attributing it to the relatively new low-interest-rate environment that requires banks to adjust cautiously.
He further explained the MPC's decision to revise the dynamic cash reserve ratio to a uniform 20 percent reserve requirement in domestic currency, effective June 4, 2026, as part of liquidity management measures. The central bank plans to meet with commercial bank CEOs to discuss the implications of these new policies.
On Treasury bill auctions, Dr. Asiama refrained from commenting on government borrowing strategies, deferring such matters to the Ministry of Finance. Concerning the depreciation of the cedi, he emphasized Ghana's managed floating exchange rate regime and the central bank's focus on avoiding excessive volatility.
Dr. Asiama attributed recent cedi depreciation to increased foreign exchange demand from higher crude oil prices and dividend repatriation by multinational companies. Despite pressures, he assured that the central bank's foreign exchange reserves are adequate for maintaining market stability.
He also discussed plans for a digital credit framework that would enable individuals and businesses to secure small loans via mobile phones, with proper supervision to prevent abuse. The Governor announced the potential launch of Ghana's first non-interest banking institution by year-end, with a regulatory framework under development.
On non-performing loans (NPLs), Dr. Asiama revealed that commercial banks have been directed to reduce bad loans by the end of 2026, with efforts to recover outstanding debts ongoing. Regarding disruptions to gold exports due to the Middle East crisis, he confirmed that temporary challenges with shipments to the UAE have been resolved through alternative arrangements.