The Bank of Ghana (BoG) has commenced a comprehensive review of its monetary policy implementation framework."We are transitioning from reliance on the unremunerated Cash Reserve Ratio to a more active Open Market Operations regime, including the use of longer-tenor BoG instruments," the Governor, Dr Johnson Pandit Asiama, has said.Speaking at the opening of the 124th Monetary Policy Committee (MPC) Meeting in Accra yesterday, the governor noted that the move was intended to enhance policy transmission, improve liquidity management, and allow greater room for credit expansion to the private sector.He said the country was seeing early signs of macroeconomic stabilisation, crediting recent policy interventions and improved domestic and external conditions, while cautioning that significant risks remain on the horizon.Dr Asiama said inflation had moderated and the local currency had appreciated sharply, and the country as well had made important strides in restoring investor confidence."According to the Ghana Statistical Service, inflation declined to 21.2 per cent in April 2025, down from previous highs," he said. "While this marks progress, it remains above the medium-term target band of 8 ± 2 per cent and the upper consultation threshold of 19 per cent."He attributed the recent easing in price pressures to tight monetary policy, exchange rate stability, and lower non-food inflation.
In response to inflationary concerns, the MPC raised the policy rate by 100 basis points in March to 28 per cent - a move the governor said is beginning to yield results."Preliminary evidence suggests this action has helped dampen inflation momentum," he added. "The cedi has appreciated nearly 19 per cent between April and May, which has eased imported inflation and boosted public confidence."However, the governor cautioned against complacency. "Risks remain from second-round inflation effects, food supply constraints particularly from northern Ghana and the Sahel, and global uncertainties including commodity price volatility and geopolitical tensions."The governor urged the committee to assess the sustainability of the current exchange rate gains, the durability of market confidence, and the medium-term inflation trajectory.
He also stressed the importance of a clear and transparent post-meeting communiqué to guide market expectations."We must approach our deliberations with professionalism, rigour, and independence," he concluded. "Our credibility depends on our ability to respond decisively to evolving economic realities."Ghana's macroeconomic outlook has also been bolstered by progress under the IMF Extended Credit Facility (ECF) Programme.
The country recently reached a Staff-Level Agreement on the Fourth Review, with a credit rating upgrade from S&P from 'Selective Default' to 'CCC+' underscoring market optimism.External reserves have strengthened, the trade balance has improved, and both consumer and business confidence are on an upward trajectory. BY KINGSLEY ASARE
