The Bank of Ghana (BoG) has raised the Monetary Policy Rate by 100 basis points to 28.0 percent.
The Governor of the Bank of Ghana, Dr. Johnson Asiama, explained that this decision aims to re-anchor the inflation-moderating process, ensuring that inflation continues on a downward trajectory.
He noted that the global environment has become more challenging, reflecting trade and economic policy uncertainty.
“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.
“In addition, the disinflation process appears to have stalled in some countries, while financial conditions remain broadly restrictive as central banks slow the pace of monetary policy easing.
Dr Asiama highlighted the need for policy to remain proactive, stating that external headwinds may spill over to the domestic economy.
“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 stated that as inflation becomes firmly anchored, the Committee will reassess the scope for a gradual easing in the policy stance.
In addition to the adjustment in the policy rate, the Bank is implementing complementary measures to strengthen liquidity management and enhance monetary policy transmission.
In this regard, the Bank assured to implement the following:
• Introduce a 273-day instrument to augment the existing sterilization toolkit.
• Intensify the monitoring of banks’ Net Open Positions (NOPs) to ensure compliance.
• Review the current structure of the Cash Reserve Ratio (CRR) to assess its broader impact on liquidity conditions and financial intermediation in the economy.