The Governor of the Bank of Ghana, Dr. Johnson Asiama, has announced that the Monetary Policy Committee (MPC) has unanimously decided to maintain the policy rate at 28.0 percent, citing a stronger cedi, easing inflation, robust external sector performance and early signs of economic growth.
This announcement follows the Committee’s 124th regular meeting held in Accra to evaluate recent economic developments and assess Ghana’s monetary policy stance going forward.
Speaking at a press briefing on May 23, 2025 Dr. Asiama struck an optimistic tone, declaring that the country was “on the right track to macroeconomic stability” and urging continued vigilance to consolidate the gains made over the past few months.
One of the most significant highlights of the briefing was the performance of the Ghana cedi. “The cedi has rebounded strongly against the major trading currencies,” Dr. Asiama stated.
“In the year to May 21, 2025, the cedi had appreciated by 24.1 percent against the US dollar, 16.2 percent against the British pound and 14.1 percent against the euro.”
He attributed this remarkable recovery to a tight monetary policy stance, record accumulation of reserves, disciplined fiscal consolidation, strict enforcement of foreign exchange market rules and improved investor sentiment.
The central bank’s foreign reserves climbed to US$10.7 billion in April, equivalent to 4.7 months of import cover – one of the highest levels in years.
Another major development shared by the Governor was the sustained decline in inflation. “Headline inflation has dropped consecutively in the first four months of the year, reaching 21.2 percent in April 2025 – a fall of 2.6 percentage points since January,” he reported.
According to the Governor of the Bank of Ghana, the easing inflation was supported by multiple factors, including tight monetary policy, reduced ex-pump petroleum prices, stability in the exchange rate and stepped-up liquidity sterilizsation efforts.
“The Bank’s core inflation measure, which excludes energy and utility prices, along with inflation expectations from businesses and households, also point to continued disinflation,” he noted.
The Governor expressed confidence that the country’s inflation could reach its medium-term target by the first quarter of 2026 – sooner than previously anticipated-provided no major shocks occur.
Despite global challenges such as restrictive financial conditions and policy uncertainty driven by trade tensions, Ghana’s domestic economic indicators are pointing upward.
“The updated Composite Index of Economic Activity increased by 2.3 percent year-on-year in March 2025, compared with 1.0 percent over the same period last year,” said Dr. Asiama.
He added that this growth was driven largely by exports, private sector credit expansion, and construction activity.
Moreover, business sentiment has turned positive, as reflected in the Ghana Purchasing Managers’ Index, which rose above the 50-point benchmark, signalling expansion.
“The latest confidence surveys indicate a significant improvement in consumer and business indices – the highest in the last seven years,” the Governor remarked.
On fiscal policy, the Governor noted that although revenue underperformed in the first quarter of 2025, government expenditure was rationalized to accommodate the shortfall.
“The primary fiscal balance has improved, and the stock of public debt declined from 61.8 percent of GDP at the end of December 2024 to 55.0 percent by the end of March 2025,” he announced.
In the external sector, Ghana posted a record provisional current account surplus of US$2.1 billion in Q1 2025. This was bolstered by increased volumes and prices of gold and cocoa exports and strong remittance inflows.
“This led to an overall Balance of Payments surplus of US$1.1 billion,” Dr. Asiama revealed.
In a strategic move to further strengthen the financial sector, the Bank of Ghana has amended the Dynamic Cash Reserve Ratio (CRR) policy.
“Effective June 5, 2025, banks will be required to maintain reserves in the currency of their respective deposits – foreign currency reserves for foreign currency deposits and domestic currency reserves for cedi deposits,” the Governor of the Bank of Ghana announced.
He explained that this change is intended to enhance liquidity management and ensure greater alignment between deposits and reserve holdings. “This adjustment is necessary to deepen confidence in the banking system and enhance financial sector resilience,” he added.
While commending the progress made, Dr. Asiama cautioned that the battle against inflation is not over. “Despite these positive developments, the current level of inflation remains high relative to the medium-term target,” he warned.
“Maintaining the tight monetary policy stance is essential to reinforce the disinflation process.”
He reiterated the Bank’s commitment to transparency and accountability, noting that “the MPC’s next meeting is scheduled to begin on Wednesday, July 21, and conclude on Friday, July 25, 2025, with a formal announcement of the next policy direction.”
