BoG Holds Policy Rate at 28% to Anchor Disinflation Path

The Bank of Ghana (BoG) has maintained its Monetary Policy Rate (MPR) at 28 percent, reaffirming its commitment to a tight monetary stance as the country steadily advances toward disinflation and macroeconomic stability. This was announced by Governor Dr. Johnson Pandit Asiama at the Monetary Policy Committee (MPC) press briefing in Accra.

Dr. Asiama noted that the latest forecast suggests that inflation will ease more quickly than previously projected, reaching the Bank’s medium-term target of single digits by the end of the first quarter of 2026—an improvement on the earlier estimate of the second quarter.

“Barring any unexpected shocks, we are on course to achieve an end-of-year inflation rate of around 12 percent. The outlook for inflation is encouraging, thanks to the combination of tight monetary policy, exchange rate gains, and fiscal consolidation,” Dr. Asiama stated.

Despite the downward trend, the Governor cautioned that inflation remains high relative to the medium-term target, necessitating continued policy vigilance. He stressed that the decision to maintain the policy rate at 28 percent was unanimous among committee members and aligned with the Bank’s mandate to ensure price stability.

“We look at the inflation path closely, and the current developments—particularly the stability of the cedi and declining non-food inflation—are in line with our projections,” he added.

Key Drivers Supporting Disinflation

The recent appreciation of the cedi, which gained over 24 percent year-to-date against the US dollar, has played a vital role in easing imported inflation pressures. The Governor also expressed optimism that policy measures announced in the 2025 Budget, particularly in the agriculture sector, will help contain food inflation going forward.

In recent months, non-food inflation has responded positively to policy tightening, even as food prices remained elevated due to seasonal factors and weather-related disruptions. With coordinated fiscal measures taking effect, the Bank expects food inflation to trend downward in the coming quarters.

New Reserve Requirement Policy Announced

In a complementary policy measure, the MPC announced a revision to the Cash Reserve Ratio (CRR) framework for banks. Effective June 5, 2025, banks will be required to maintain their CRR in the same currency as the deposit—domestic currency reserves for Ghana cedi deposits and foreign currency reserves for foreign currency deposits.

This change, according to the BoG, aims to improve liquidity management and reduce currency mismatches in the banking system.

Outlook Remains Cautiously Optimistic

While the BoG’s policy stance remains tight, the Bank is confident that inflation is on a sustained downward path. The current combination of macroeconomic stability, a strong external reserve position, and enhanced fiscal discipline has created a more favorable environment for monetary policy transmission.

“We are optimistic that our inflation target is within reach and that we can re-enter the target band by the first quarter of 2026,” Dr. Asiama emphasized.

The MPC reiterated its commitment to data-driven decision-making and signaled that policy flexibility would be maintained to respond to any unforeseen domestic or global economic shocks.

The decision to hold the rate at 28 percent sends a clear signal to markets and investors that the BoG is firmly focused on anchoring inflation expectations while supporting the ongoing economic recovery.