The Bank of Ghana (BoG) has made a significant adjustment to its inflation target for 2025, revising it downward to 12% from the initial projection of 16%.
According to Governor Dr. Johnson Asiama, this revision is a testament to the effectiveness of the central bank’s policy actions and the government’s fiscal strategies.
Speaking at the IMF/World Bank Spring Meetings in Washington, D.C., Dr. Asiama highlighted the recent stabilization of the Ghanaian cedi and the outcomes of the Monetary Policy Committee (MPC) meeting as key indicators of progress in the fight against inflation.
The Governor expressed optimism that these measures will lead to a reduction in food prices and a subsequent decrease in overall inflation.
With the next MPC meeting scheduled for May 22, 2025, further decisions are expected to be made to support the new inflation target.
Ghana’s inflation rate has been trending downward, with a notable decline to 22.4% in March 2025 from 23.1% in February. This downward trend has raised hopes that price pressures will continue to ease.
The MPC’s recent decision to raise the policy rate by 100 basis points to 28% demonstrates the central bank’s commitment to containing inflation. Some analysts speculate that another rate hike may be considered in May to help achieve the 12% target.
The International Monetary Fund (IMF) has endorsed Ghana’s approach to tightening monetary policy, stating that a combination of tight monetary policy and restrained public spending could lead to further inflation reduction.
However, the IMF’s projection of 17.5% inflation by the end of 2025 differs significantly from the government’s target of 11.9% outlined in the 2025 Budget.
Nevertheless, the IMF forecasts that Ghana may achieve single-digit inflation by the end of 2026, with a projected rate of 9.4%. This forecast provides a glimmer of hope for the country’s economic future.