In a move aimed at reining in inflation, the Bank of Ghana (BoG) has raised its Monetary Policy Rate by 100 basis points to 28.0 percent. This decision is a response to the increasingly challenging global economic landscape.
According to Governor Dr. Johnson Asiama, the global environment has become more uncertain, with trade and economic policy tensions on the rise.
“The series of tariffs announced by the U.S. administration is evolving and may have negative effects on the global economy. These developments have already triggered downgrades in GDP growth forecasts in the two largest economies-U.S. and China- and in turn, global growth.”
Dr. Asiama also noted that the disinflation process has stalled in some countries, while financial conditions remain restrictive. However, he emphasized that the BoG will remain proactive in its policy approach.
“The persistence of these external headwinds may spill over to the domestic economy through the trade and financial channels, highlighting the need for policy to remain proactive,” he stated.
The BoG’s decision is expected to have a positive impact on the country’s inflation outlook. As inflation becomes more stable, the Bank may consider easing its policy stance.
In the meantime, the BoG is implementing complementary measures to strengthen liquidity management and enhance monetary policy transmission.