The Bank of Ghana (BoG) has increased the Monetary Policy Rate by 100 basis points, bringing it to 28.0 percent.
Dr. Johnson Asiama, the Governor of the Bank of Ghana, stated that this measure is intended to stabilize the process of moderating inflation, ensuring that it continues to decline.
He pointed out that the global landscape has become increasingly difficult, marked by uncertainties in trade and economic policies.
“The ongoing series of tariffs introduced by the U.S. administration is evolving and could adversely impact the global economy. These changes have already led to downgrades in GDP growth projections for the two largest economies, the U.S. and China, which in turn affects global growth.
“Moreover, the disinflation process seems to have stagnated in several countries, while financial conditions remain largely restrictive as central banks reduce the pace of monetary policy easing.
Dr. Asiama emphasized the importance of maintaining a proactive policy stance, noting that external challenges could affect the domestic economy.
“The ongoing external challenges may influence the domestic economy through trade and financial channels, underscoring the necessity for a proactive policy approach,” he remarked.
The BoG indicated that as inflation becomes more firmly established, the Committee will reevaluate the potential for a gradual relaxation of the policy stance.
In addition to the policy rate adjustment, the Bank is implementing supplementary measures to enhance liquidity management and improve the transmission of monetary policy.
To this end, the Bank has committed to the following actions:
1. Introduce a 273-day instrument to supplement the existing sterilization toolkit.
2. Increase monitoring of banks’ Net Open Positions (NOPs) to ensure adherence to regulations.
3. Review the current structure of the Cash Reserve Ratio (CRR) to evaluate its broader effects on liquidity conditions and financial intermediation within the economy.
