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BANK OF GHANA
MONETARY POLICY COMMITTEE (MPC)
PRESS RELEASE
March 28, 2025

Good afternoon, ladies and gentlemen of the press.
1. Thank you for joining us today for this press briefing following the conclusion of
the 123rd regular meeting of the Monetary Policy Committee (MPC) held this week
to assess recent economic developments and risks to the inflation outlook. As part
of our continued commitment to transparency and accountability, this briefing
provides an overview of the key discussions on recent macroeconomic developments
and the decision taken by the Committee on the monetary policy stance.

A. Global Economic Developments
2. The global economy was resilient through 2024 supported by strong real income
growth and a less restrictive monetary policy stance relative to 2023. In the first
few months of 2025, trade frictions arising from an emerging tariff war, elevated
global interest rates, and geopolitical tensions have heightened uncertainty about the
global growth outlook. These uncertainties have weighed negatively on consumer
and business confidence, softened investor sentiment, and increased downside risks
to growth.

3. The disinflation path has stalled in some Advanced Economies, on the back of
persistence in services inflation, resurgence in goods inflation, and the recent
tariff actions by the U.S. The imposition of additional tariffs by the U.S. and
retaliatory responses have pushed up long-term inflation expectations in some
Emerging Market Economies. In addition, the process of disinflation, which was
expected to be supported by a decline in crude oil prices, could be partly offset by
the effect of the tariff increases. Against this backdrop, global inflation is expected
to remain high in the near-term.

4. Global financial conditions remain broadly restrictive. This is driven by high
monetary policy rates, rising long-term bond yields, declining capital flows to
Emerging Market and Developing Economies, and volatile equity markets. The
Federal Reserve, Bank of Japan, and Bank of England all kept their policy rates
unchanged in March 2025 on account of rising trade and economic uncertainty, while
the European Central Bank cut its policy rate to boost growth in the Euro Area.

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Expectations of higher-for-longer policy rates and rising uncertainty kept long-term
bond yields high, while equity markets remained cautious due to concerns about the
effects of tariffs.

B. Domestic Macroeconomic Conditions
5. On the domestic front, growth continued to rebound, exceeding initial
expectations. Provisional data from the Ghana Statistical Service estimated real
GDP growth at 5.7 percent in 2024, higher than the programmed growth rate of 4.0
percent for 2024, and the 3.1 percent recorded in 2023. Non-oil GDP grew at 6.0
percent compared with 3.6 percent recorded in 2023. The growth outturn in 2024
was driven by activities in the industry and services sectors. However, growth in the
agricultural sector was slower, driven by lower crop yield due to adverse weather
conditions, among other factors.

6. The Bank’s real sector indicators point to a sustained improvement in economic
activity, amid significantly improved business and consumer sentiments. The
updated Composite Index of Economic Activity (CIEA) rose by 5.7 percent yearon-year in January 2025, relative to 3.5 percent in the same period of 2024, driven
by increased consumption, international trade activities, and private sector credit
growth. The confidence surveys conducted in February 2025 also showed significant
improvement in both consumer and business sentiments, buoyed by expectations for
an improved macroeconomic environment.

7. Inflation remained high in 2024 and sticky around 23 percent, significantly
higher than expectation. The latest data released by the Ghana Statistical Service
indicates that headline inflation eased marginally from 23.8 percent in December
2024 to 23.1 percent in February 2025, due to easing but still high non-food inflation.
Food inflation has remained elevated on account of unfavourable climatic conditions
and other constraints.

8. The Bank’s main core measure of inflation eased marginally in the first two
months of 2025. Inflation, excluding energy and utility items from the consumer
basket, eased from 23.1 percent in December 2024 to 22.4 percent in February 2025,
and compared with 24.0 percent in the same period last year. This notwithstanding,
latest inflation expectations, as derived from the Bank’s model, the yield curve, and
surveys point to softening of expectations, although still above the medium-term
target.

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9. Private sector credit is beginning to show signs of recovery. In February 2025,
private sector credit recorded 26.9 percent annual growth, compared with 5.1 percent
in February 2024. In real terms, credit growth was 3.1 percent, compared with a
decline of 14.7 percent in February 2024.

10. The banking sector performance continued to improve. Total bank assets
recorded 34.0 percent growth at the end of February 2025 relative to 12.1 percent
growth, in the same period last year. With regulatory reliefs, the banking industry’s
Capital Adequacy Ratio (CAR) was higher at 14.4 percent compared to 13.6 percent
in the same period last year. Without reliefs, CAR was 12.1 percent. The industry’s
Non-Performing Loan (NPL) ratio declined to 22.6 percent in February 2025 from
24.6 percent in February 2024. Excluding the loans in the loss category, which are
fully provisioned, the NPL ratio as at end-February 2025 was 8.9 percent. Overall,
the Financial Soundness Indicators showed broad improvements in asset growth,
solvency, liquidity, efficiency, and profitability.

11. The fiscal policy stance was more expansionary than expected in 2024. The 2024
fiscal deficit, on commitment basis, was 7.9 percent of GDP against a target of 3.8
percent of GDP, on the back of higher expenditures than target. This
notwithstanding, early indications from banking sector data suggest some
improvements in fiscal performance in early 2025. This, along with the commitment
to fiscal consolidation presented in the 2025 budget, should support the fiscal
outlook. Also, the ratio of public debt declined supported by the debt restructuring.

12. Prices of Ghana’s major export commodities traded mixed on the international
commodities market in early 2025. Gold prices crossed the US$3,000 per fine
ounce on March 14, 2025, on account of heightened economic uncertainty triggered
by the trade and geopolitical tensions, persistent inflation, and weakening US dollar.
In February 2025, gold prices averaged US$2,897.3 per fine ounce, indicating a
year-on-year growth of 9.7 percent. Similarly, crude oil prices recorded a marginal
annual growth of 2.4 percent to settle at an average price of US$74.95 per barrel.
Cocoa prices, however, declined by 8.5 percent driven by improving supply outlook
for the current 2024/25 season.

13. The strong external sector performance in 2024 continued in early 2025,
indicating a significant improvement in the accumulation of reserves. In the first
two months of 2025, the trade account recorded a surplus due to higher export
receipts relative to imports. Total exports posted 50.0 percent annual growth to reach

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US$4.3 billion, driven by increased gold and cocoa exports arising from both price
and volume effects. In contrast, crude oil exports declined as output from the three
oil producing fields fell. Total imports increased by 7.3 percent year-on-year to
US$2.7 billion.

14. Consequently, international reserve accumulation met the IMF programme
expectation for 2026. The stock of Gross International Reserves, at the end of
February 2025, was US$9.4 billion, enough to cover 4.2 months of imports of goods
and services. This compares to the stock of US$8.9 billion at the end of December
2024, equivalent to 4.0 months of imports of goods and services. The Gross
International Reserves, as defined under the IMF programme to exclude the
encumbered assets and petroleum funds, increased to US$6.9 billion, equivalent to
3.0 months of imports of goods and services, in February 2025.

15. The foreign exchange market has continued to witness stability in recent
months, aided by improved liquidity from remittance inflows and the Domestic
Gold Purchase Programme. The stability in the FX market is expected to remain,
reflecting stronger reserve buffers and positive market sentiments. As of March 26,
2025, the Ghana cedi depreciated at a slower pace of 5.3 percent against the US
dollar, compared to 7.6 percent in the same period of last year.

C. Summary and Outlook
16. In summary, the Committee 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. 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.

17. On the domestic front, early indications point to improved growth prospects.
The Bank’s CIEA rebounded, and the Ghana Purchasing Managers’ Index moved
above the 50-benchmark in February, implying increases in new orders by
companies. Both business and consumer confidence have improved, and private

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sector credit growth is recovering. These developments suggest a positive outlook
for the economy.

18. The external sector outlook remains strong. This is against the backdrop of
increases in gold exports driven by sustained implementation of the Gold-forReserve programme, continued growth in remittance inflows, and commitment to
the implementation of policies and reforms under the IMF programme. In the
outlook, the continued buildup of reserve buffers is expected to support the stability
of the currency.

19. The banking sector has remained broadly stable. Credit risks within the banking
sector, however, remain elevated, as underscored by increased non-performing loan
ratios. The Bank’s latest macroprudential risk assessment indicates some moderation
in systemic risks on the back of improved solvency, liquidity, efficiency, and
profitability. Going forward, the Bank will continue to closely monitor
undercapitalised banks to safeguard the stability and soundness of the banking
sector.

20. The Committee observed that the fiscal stance was expansionary in 2024. This
has created significant fiscal impulses, and a liquidity overhang that needs to be
carefully managed. The strong liquidity conditions could spill over into other
segments of the economy and derail the disinflation path. While the government has
signalled a strong commitment to fiscal consolidation, monetary policy restraint is
required.

21. While headline inflation has declined marginally, it remains a concern. Both
food and non-food inflation are significantly above expectation, and core inflation
remains elevated. While food inflation was driven largely by supply side factors,
preventing second-round effects from such increases will be essential. The persistent
inflation dynamics over the past year, partly driven by both fiscal and monetary
policy missteps, will require a policy reset to re-anchor the disinflation process. To
restore price stability going forward will require a tight monetary policy stance,
strong liquidity management, and commitment to the 2025 budget which seeks to
reset the fiscal consolidation process.

D. Monetary Policy Decision
22. Under the circumstances, the Committee, by a majority decision, decided to raise the
Monetary Policy Rate by 100 basis points to 28.0 percent to re-anchor the

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disinflation process. As inflation becomes firmly anchored, the Committee will
reassess the scope for a gradual easing in the policy stance.

Additional Operational Measures
23. 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 will:
• 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.


END.