Bank of Ghana strengthens monetary policy amid economic uncertainties

Ghana’s central bank has announced plans to deepen its already monetary policy stance despite a recent decline in the inflation rate. Governor Ernest Addison reiterated this commitment during a press briefing following the latest meeting of the Monetary Policy Committee (MPC) to assess the country’s economic outlook.

Despite a significant drop in inflation from 54.1 percent in December 2022 to 22.8 percent last month, Addison highlighted ongoing uncertainties that could affect the inflation trajectory for the rest of the year. These uncertainties are primarily due to recent exchange rate pressures, increases in utility tariffs, and a surge in ex-pump fuel prices.

“Even though we expect inflation to remain within the target range of between 13 percent and 17 percent this year, the risks are tilted slightly upward,” Addison stated.

In response to these risks, the MPC decided to maintain the policy rate at 29 percent. The governor emphasized that a strong monetary policy and continued fiscal consolidation efforts are essential to achieving the end-year inflation target.

Ghana, known as the world’s second-largest cocoa producer and a significant exporter of fossil fuels, has been grappling with chronic economic challenges. In May 2023, the country secured a three-year, $3 billion bailout package from the International Monetary Fund (IMF) to help reduce inflation, curb currency depreciation, and revive the struggling economy.

This latest move by the Bank of Ghana underscores the central bank’s commitment to stabilizing the country’s macroeconomic conditions and ensuring a sustainable economic recovery.