The Bank of Ghana (BoG) has initiated a thorough evaluation of its monetary policy framework, transitioning towards more dynamic instruments for liquidity management and fostering private sector development.
This shift entails a focus on enhanced Open Market Operations, incorporating longer-tenor BoG instruments, and moving away from the previously relied upon unremunerated Cash Reserve Ratio to a more proactive Open Market Operations strategy.
Governor Dr. Johnson Asiama emphasized that this review aims to fortify policy direction and uphold disinflation efforts without hindering the delicate economic recovery.
He stated, ‘This initiative is designed to improve policy transmission, enhance liquidity management, and provide increased opportunities for credit expansion to the private sector,’ during the commencement of the 124th Monetary Policy Committee meeting in Accra.
Dr. Asiama acknowledged that while inflation is decreasing, it remains vulnerable to secondary effects, ongoing food supply disruptions from northern Ghana and the Sahel, as well as external price shocks stemming from fluctuating global commodity markets.
He further remarked, ‘Geopolitical tensions and shifting global trade dynamics, including the recent tariff disputes led by the US, have intensified market uncertainty and may influence commodity prices, exchange rates, and financial flows in emerging markets such as ours.’
Additionally, the Bank of Ghana indicated intentions to implement significant monetary and regulatory reforms to maintain the recent positive trend of the cedi, which has appreciated by nearly 19 percent year-to-date.
‘This appreciation is attributed to a combination of factors, including sound monetary policy, improved market sentiment, and gains in the external sector,’ he concluded.
