In a speech to bank CEOs following the Monetary Policy Committee (MPC) meeting, Bank of Ghana Governor Dr. Johnson P. Asiama set out the rationale for the MPC’s majority decision to raise the policy rate by 100 basis points to 28.0 percent to reinforce disinflation. He also urged banks to adjust lending rates prudently and communicate transparently with clients as the tightening feeds into funding costs and credit pricing. The Governor cited a fall in headline inflation from 23.8 percent in December to 22.4 percent in March, while noting elevated inflation expectations and core inflation above the medium-term target alongside expanding private sector credit and broad money. On banking system conditions, he reported year-on-year asset growth of 34.05 percent at end-February 2025 and deposit growth of 27.89 percent, with a Capital Adequacy Ratio of 14.35 percent versus a 10 percent regulatory minimum, while flagging unresolved recapitalisation for a few domestically controlled and state-owned banks and intensified supervisory engagement on capital restoration. Credit risk remained a focus, with the non-performing loan ratio at 22.57 percent at end-February 2025, or 8.93 percent excluding fully provisioned loss-category loans, and banks were pressed to strengthen underwriting, early warning and provisioning; the speech also highlighted cyber and fraud expectations under the Cybersecurity Directive, AML compliance ahead of GIABA’s third-round mutual evaluation next year, and ongoing work to strengthen recovery planning and introduce a Resolvability Assessment Framework. Next steps signalled include continued bilateral work with undercapitalised institutions on credible recapitalisation strategies, deeper engagement with non-bank financial service providers, and sector engagement to develop coordinated solutions for trade finance and cross-border payments including PAPSS, alongside consideration of compulsory Basel III and IV training for bank directors.

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