- Decision
- Maintain
- Rate change
- 0 bps
- policy rate
- 28%
The Bank of Ghana’s Monetary Policy Committee left the policy rate at 28.0 % at its 23 May meeting, judging that although headline inflation has fallen for four consecutive months to 21.2 % in April, it remains well above the medium-term target and still warrants a “tight stance” to cement the disinflation trend amid improving domestic demand. The decision follows a 100 bp hike in March after a January hold, taking the rate to its present level. To buttress transmission, the Committee will from 5 June require banks to hold the dynamic cash reserve ratio in the same currency as the underlying deposits. Activity indicators point to recovery: the Composite Index of Economic Activity rose 2.3 % y/y in March and the Ghana PMI climbed above 50, while consumer and business confidence hit a seven-year high. Externally, a US$2.1 bn current-account surplus in Q1 and a US$10.7 bn stock of gross international reserves (4.7 months of imports) underpinned a 24.1 % year-to-date appreciation of the cedi against the USD. The Committee noted persistent global trade tensions, uneven disinflation and restrictive global financial conditions but said Ghana’s reserve build-up, fiscal consolidation and exchange-rate stability should support a faster return of inflation to the target by Q1 2026; it signalled policy will stay restrictive until that path is secure.
Rate evolution
From July 2025 to March 2026, the Bank of Ghana cut the Monetary Policy Rate by 1,100 basis points from 25.0 percent to 14.0 percent, delivering a rapid easing cycle before pausing in May 2026 and maintaining that stance in July and September 2026. The cuts were initially driven by a sharp and broad-based disinflation, declining core inflation, anchored inflation expectations, cedi appreciation, strong fiscal consolidation and a marked strengthening in external buffers, while firming economic activity and high real interest rates gave the Committee scope to support recovery. As the cycle progressed, the Committee increasingly framed policy as shifting from restoring stability to consolidating macroeconomic gains, supporting real sector recovery, job creation and financial intermediation, even as it continued to flag risks from utility tariff adjustments, commodity-market volatility and global uncertainty.
After the final cut in March 2026, the Committee held at 14.0 percent in May and again in July, first judging risks to inflation and growth as broadly balanced because headline inflation remained below target, core pressures were still easing and domestic spillovers were muted, and later concluding that the current stance remained appropriate to guide inflation into the medium-term target band while allowing time to assess evolving geopolitical developments and their potential impact on the domestic economy. In July, it noted that headline inflation had risen to 5.3 percent in June from 3.7 percent in May, largely on base effects and a temporary increase in transport fares following higher crude oil prices, while core inflation and inflation expectations also increased but remained broadly within the target band, against a backdrop of stronger domestic growth, higher private sector credit growth, continued fiscal consolidation and adequate reserve buffers. In September, it unanimously maintained the rate at 14.0 percent and again judged risks to inflation and growth as broadly balanced, noting that headline inflation rose to 5.0 percent in August from 4.6 percent in July on utility tariff pass-through and high crude oil prices but remained below the lower bound of the medium-term target band, while core inflation and inflation expectations eased, growth remained resilient, and fiscal consolidation, improved food supply and exchange-rate stability presented offsetting downside risks.