The Bank of Ghana (BoG) has reduced its monetary policy rate by 150 basis points to 14 per cent, citing sustained improvements in macroeconomic conditions despite lingering global uncertainties.
The Monetary Policy Committee (MPC) in its meeting in January cut the MPR by 250 basis points to 15.5 from 18 percent.
Announcing the decision at a press conference after the 129th regular meeting of the MPC, the Governor of the BoG, Dr Johnson Pandit Asiama, said the move was underpinned by strong domestic economic performance and a favourable inflation outlook.
He explained that recent data pointed to continued recovery and stability in the economy, which provided room for a gradual easing of the previously tight monetary policy stance.
“Current macroeconomic conditions remain strong, and the disinflation process has been sustained over the past year,” he stated, expressing confidence that the stability would persist in the medium term.
According to Dr Asiama, who is the chairman of the MPC, global developments, particularly the ongoing conflict in the Middle East, continued to pose risks to the outlook.
The conflict, he said, had disrupted supply chains, increased volatility in crude oil prices, and heightened financial market uncertainty.
Those developments, the Governor noted, could tighten global financing conditions and weigh on growth.
On the domestic front, Dr Asiama said the provisional data from the Ghana Statistical Service indicated that real Gross Domestic Product (GDP) grew by six per cent in 2025, up from 5.8 per cent in 2024.
Non-oil GDP growth also strengthened to 7.6 per cent, driven largely by the services and agriculture sectors.
Dr Asiama said the high-frequency indicators compiled by the BoG further showed increased economic activity.
He said the Bank’s Real Composite Index of Economic Activity recorded an annual growth of 8.4 per cent in January 2026, compared with six per cent in the same period last year.
“Inflationary pressures continue to ease, with headline inflation declining to 3.3 per cent in February 2026 from 5.4 per cent in December 2025. Core inflation also trended downward, reflecting subdued underlying price pressures,” Dr Asiama stated.
He said the current disinflation was due to tight monetary policy, exchange rate stability, and improved food supply conditions.
The Governor noted that interest rates had responded accordingly, with yields on short-term government instruments declining sharply.
He said average lending rates of banks also fell to 19.2 per cent in February 2026 from 30.1 per cent a year earlier, supporting increased private sector credit.
“Fiscal performance also improved, with the overall deficit narrowing to one per cent of GDP in 2025, below the target of 2.8 per cent. The public debt stock declined significantly to 45.3 per cent of GDP from 61.8 per cent in 2024,” Dr Asiama said.
On the external sector, Dr Asiama said the external sector remained robust, recording a trade surplus of $3.7 billion in the first two months of 2026, supported by strong gold exports.
He said Gross International Reserves rose to $14.8 billion, equivalent to 5.8 months of import cover at the end of February.
Despite the positive outlook, the MPC cautioned that rising geopolitical tensions and potential increases in oil prices could pose risks to inflation.
He reaffirmed the readiness of the MPC to act decisively to maintain price stability and ensure sustained economic growth.
BY KINGSLEY ASARE
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