Ghana’s central bank has signalled cautious optimism over the country’s economic outlook, citing gains in currency strength and falling inflation, but warned that risks to sustained recovery remain significant.
Opening the Bank of Ghana’s 124th Monetary Policy Committee (MPC) meeting on Wednesday (21 May), Governor Dr Johnson Asiamah acknowledged that the cedi’s recent rally – an appreciation of nearly 19% between April and May – has helped to ease inflationary pressures and rebuild public confidence.
“Importantly, the cedi has appreciated sharply by nearly 19 per cent… helping to ease imported inflation pressures and restore public confidence,” Dr Asiamah said. “The appreciation reflects a combination of factors, including prudent monetary policy, improved market sentiment, and external sector gains.”
The comments come as Ghana’s macroeconomic environment shows early signs of stability, buoyed by tighter monetary controls, improving external reserves, and a recent credit rating upgrade by S&P from Selective Default to CCC+.
Inflation dropped to 21.2% in April 2025, down from earlier highs, although it remains well above the Bank’s medium-term target of 8% ± 2%.
“In March, the Committee responded decisively to the inflation outlook by raising the policy rate by 100 basis points to 28 per cent,” the Governor noted.
“Preliminary evidence suggests this action has contributed to dampening inflation momentum.”
Despite these gains, the Governor warned that underlying vulnerabilities, such as food supply challenges from northern Ghana and the wider Sahel region, and external shocks from volatile global commodity markets, continue to threaten progress.
“Significant challenges persist,” Dr Asiamah said. “The inflation outlook… remains vulnerable to second-round effects, food supply constraints… and external price shocks, particularly given volatile global commodity markets.”
He also highlighted growing global uncertainty stemming from geopolitical tensions and recent trade disputes led by the United States, which could disrupt financial flows and commodity pricing in emerging markets like Ghana.
Robust market
To strengthen the monetary policy framework, the Bank of Ghana is rolling out reforms, including a shift from unremunerated cash reserve requirements to a more robust open market operations regime. This includes the use of longer-term Bank of Ghana instruments aimed at improving liquidity management and supporting credit flow to the private sector.
As the central bank deliberates its next move, questions around the sustainability of the cedi’s recovery and the durability of renewed market confidence are at the heart of discussions.
“Our credibility depends on our ability to respond decisively and proportionately to evolving economic realities,” Dr Asiamah said.
The MPC is expected to announce its new policy stance on Friday, 23 May. Analysts anticipate a cautious approach, with potential for holding the policy rate steady to protect recent gains while supporting economic recovery.
