PUBLIC
PUBLIC


Good morning, ladies and gentlemen of the media and welcome to the press briefing for the 122nd
Monetary Policy Committee (MPC) meetings, which is also the MPC’s first meeting of the year 2025.
During the meetings, the Committee deliberated on macroeconomic developments in 2024, assessed the
current state of the economy, and the risks to the inflation and growth outlook. A summary of the
assessment and key considerations that informed the Committee’s decision on the monetary policy rate
is provided below:

A. Global Developments

1.
The momentum in global economic growth observed at the beginning of 2024 was sustained
throughout the year. The January 2025 World Economic Outlook (WEO) report indicates an upward
revision in growth from 3.2 percent in the October 2024 WEO to 3.3 percent. The better-than-expected
global growth outturn in 2024 was primarily due to strong growth in the U.S, a pickup of economic
activity in China, and stability in Emerging Market Economies, which together offset weaker growth in
the Euro Area. Global growth is expected to remain stable in 2025, underpinned by low inflation, steady
employment growth and a supportive monetary policy stance. However, rising uncertainty associated
with trade protectionist policies and geopolitics may weigh in on business and consumer confidence,
and in the process dampen the growth outlook for 2025.

2.
Inflation continued its downward trend throughout 2024, as most central banks moved
closer to their targets. The ease in inflationary pressures was largely supported by subdued crude oil
prices and the gains from tighter monetary policy stances adopted earlier. However, there are signs of
underlying inflationary pressures in the services sector and the tight labour market conditions. In the
outlook, global headline inflation is forecast to decline further in 2025 and 2026 as core inflation trends
down mainly from slower wage growth.

3.
Global financial conditions eased somewhat in late 2024, but remained restrictive. Policy
rates globally have remained restrictive due to slower-than-expected disinflation in some regions,
surging long-term bond yields in advanced economies, and increasing uncertainty surrounding changes
to U.S. trade and immigration policies. For Emerging Market and Developing Economies, the tight
monetary policy stance in Advanced Economies and rising uncertainty related to policy shifts by the
new US administration have weighed on equity prices and led to volatile investor sentiments. Looking
ahead, financial conditions are expected to ease gradually as policy stance becomes more

accommodative as inflation cools off in the United States and in the Euro Area. These conditions are
expected to result in improvements in investor sentiments towards Emerging Market and Developing
Economies.


B. Domestic Macroeconomic Conditions

4.
On the domestic front, economic activity was stronger with higher-than-projected growth
in the first three quarters of 2024. The latest data from the Ghana Statistical Service showed that real
GDP expanded at an annual rate of 6.3 percent during the first three quarters of 2024, relative to 2.6
percent during the corresponding period in 2023. Non-oil GDP grew by 6.2 percent from 3.3 percent
over the same comparative period. The strong growth outturn was mainly driven by gold production in
the industry sector. In the fourth quarter of 2024, the Bank’s Composite Index of Economic Activity
(CIEA) suggests that growth will remain strong, driven in large parts by international trade activities,
increased credit to the private sector by banks, construction activities, and tourist-related spending.

5.
The latest confidence surveys conducted in December 2024 showed an improvement in both
consumer and business confidence. Consumer confidence improved largely on account of optimism
about future economic conditions. Business confidence also picked up as firms met their short-term
targets and expressed positive sentiments about company and industry prospects in line with improving
macroeconomic conditions. Ghana’s Purchasing Managers’ Index (PMI), however, declined to 49.4 in
December 2024 from 52.5 in the previous month largely due to a slowdown in firms’ operations during
the election period.

6.
Price developments in 2024 indicated a slowdown in the disinflation process resulting
mainly from food price pressures. At the beginning of the year, inflation rose from 23.2 percent in
December 2023 to 25.8 percent in March 2024. Thereafter, it declined steadily to 20.4 percent in August
but has since risen to 23.8 percent in December 2024, primarily due to food price increases. The
increased prices in the food sector were largely attributable to dry weather conditions experienced in the
earlier parts of the year, which adversely affected harvest yields. In contrast to food inflation, non-food
inflation declined steadily during the last quarter of the year, settling at 20.3 percent.

7.
Total liquidity, measured through the key monetary aggregates, declined in 2024. Annual
growth in broad money supply (M2+) decreased to 31.9 percent in December 2024, relative to 38.7
percent in December 2023. The decline in M2+ growth was attributable to a slower pace of growth in
all the components – demand deposits, savings and time deposits, and foreign currency deposits – except
for currency held by the public, which increased over the same comparative period.

8.
Private sector credit growth continued to increase towards pre-2022 macroeconomic crisis
levels, albeit slowly. Nominal growth in the private sector credit increased to 26.3 percent in December
2024 from 10.7 percent recorded in the corresponding period of 2023. In real terms, credit to the private
sector increased by 2.0 percent relative to a 10.2 percent contraction recorded over the same comparative
period in the previous year.

9.
The banking sector continues to be profitable, well-capitalized and liquid. Assets of the
banking sector grew by 33.8 percent in 2024. Capital Adequacy Ratio (CAR) with reliefs grew

marginally to 14.0 percent in December 2024 from 13.9 percent in December 2023. However, CAR
without reliefs rose to 11.3 percent in December 2024, higher than the 8.3 percent recorded in December
2023. Profits went up in 2024 relative to 2023, but the pace of growth slowed, resulting in the moderation
of profitability indicators during the period. In the outlook elevated credit risk remained the main upside
risk to the banking sector. The industry’s Non-Performing Loans (NPL) ratio increased to 21.8 percent
in December 2024, up from 20.6 percent in December 2023. The resilience of the banking sector in 2024
was supported by improved domestic macroeconomic conditions.

10.
Money market rates broadly trended downwards. The 91-day and 182-day Treasury bill rates
declined to 27.73 percent and 28.43 percent respectively, in December 2024, from 29.39 percent and
31.70 percent respectively, in December 2023. Similarly, the rate on the 364-day instrument declined to
29.95 percent in December 2024 from 32.97 percent in December 2023. Additionally, the Interbank
Weighted Average Rate (IWAR) dropped to 27.03 percent in December 2024 from 30.19 percent a year
earlier. This decline contributed to a reduction in average lending rates for banks from 33.75 percent to
30.25 percent over the same period.

11.
The Ghana Stock Exchange recorded a strong performance in 2024. The Ghana Stock
Exchange Composite Index (GSE-CI) gained 56.2 percent on a year-on-year basis in December 2024,
compared to a gain of 28.1 percent for the same period last year. The robust performance of the GSE-CI
was underpinned by improved investor sentiments, significant recovery in the profitability of listed
financial institutions and improved liquidity on the market. Market capitalisation increased to
GH¢111.36 billion at end December 2024, compared to GH¢73.89 billion in the corresponding period
of 2023.

12.
Prices of the major export commodities on the international commodities market traded
mixed in 2024. Cocoa prices rose sharply to US$10,869.1 per tonne in December 2024 from US$4,235.6
per tonne in December 2023, on the back of reduced supplies due to adverse weather conditions which
affected top producers such as Cote d’Ivoire. Gold prices increased by 29.4 percent to US$2,641.5 per
fine ounce in December 2024 from US$2,035.4 per fine ounce a year earlier. In contrast, crude oil prices
fell by 5.3 percent year-on-year to settle at an average price of US$73.2 per barrel in December 2024,
following concerns over supply risks and the prospects of increased supply in 2025.

13.
The external sector position improved significantly in 2024 on account of increased trade
surplus and lower capital outflows. The current account recorded a provisional surplus of US$3.8
billion, compared with a surplus of US$1.4 billion in 2023, driven mainly by higher gold and crude oil
exports, as well as strong remittance inflows. This, together with a lower net outflow of US$588 million
in the capital and financial account, relative to a net outflow of US$733 million in 2023, contributed to
an improved balance of payments position for the year. The lower outflow in the capital and financial
account reflects Ghana’s successful debt restructuring and the IMF ECF programme. These favourable
developments resulted in an improved balance of payments surplus of US$3.1 billion, compared to a
surplus of US$518 million recorded in 2023.

14.
International reserves build-up was faster than programmed in 2024. Gross International
Reserves (GIR) increased to a stock position of US$8.98 billion at the end of 2024 and was enough to
cover 4.0 months of imports, exceeding targets under the IMF programme. This compares favourably
with the end-December 2023 GIR of US$5.92 billion (2.7 months of imports).

15.
The cedi came under intermittent pressures during the first three quarters of the year, but
regained some value in the last quarter of the year. Increased demand for foreign exchange to support
energy related payments, uncertainty around timelines on conclusion of the external bond restructuring,
uncertainties around COCOBOD financing arrangements, and election-related jitters exerted pressure
on the currency and by the end of the third quarter, the currency had depreciated by 24.8 percent on a
year-on-year basis. In the last quarter, commercial banks’ participation in the gold purchase programme
for foreign currency, positive sentiments from the progress made in the debt restructuring, and continued
tight liquidity management caused the currency to appreciate. By the end of the year, the currency had
depreciated by 19.0 percent against the US dollar.


C. Summary and Outlook

16.
The Committee noted that global economic conditions broadly improved in 2024. Global
inflationary pressures have gradually eased over the period, which has led to easing monetary policy
stance across several countries. Consequently, global financial conditions are expected to ease gradually
as policy stances become more accommodative and inflation targets in Advanced Economies are met
and expectations anchored. These conditions are expected to result in improvements in investor
sentiments towards emerging market and developing economies. On top of the projected steady growth
for 2025, the international markets have priced in a much stronger US economy stemming from the
policies to be implemented by the new US administration. This has already instigated a stronger US
dollar with implications for emerging markets and developing economies, including Ghana.
Complementary fiscal and monetary policies will therefore have to be carefully set to prevent spillovers
to the Ghanaian economy.

17.
External sector conditions remain positive, with sustained and stronger-than-programmed
rebuilding of reserve buffers contributing to the stability of the domestic currency. The
performance of the external sector was mainly driven by strong growth in gold exports, which also
largely impacted positively on growth. In the outlook, the external sector is expected to remain strong
as commodity prices remain favourable amid improvements in production. Overall, while the external
sector conditions are expected to provide an anchor to exchange rate stability, key risks in the outlook
including challenges in the energy sector will have to be closely monitored.

18.
The stronger-than-projected growth and generally improved macroeconomic conditions
are spilling over positively to the banking sector. To sustain this effort, the Bank of Ghana will
continue to ensure that banks with capital gaps adhere to their committed recapitalisation plans to shore
up solvency. Supervisory activities will be intensified to ensure that banks continue to address the high
NPLs, which poses potential risks to the stability of the industry. The improvement in domestic
macroeconomic conditions is also expected to bolster debt servicing capabilities of corporate and
household sectors, which would help mitigate further build-up of NPLs within the industry.

19.
The inflation profile remains elevated, largely driven by food price movements, especially
in the last quarter of the year. The climate-related factors including the dry spell in some parts of the
food-growing regions of the country and the late onset of rains, negatively affected production, while
supply chain weaknesses generally affected food prices. While the inflation outturn for the year 2024

deviated from target, it is expected that the disinflation process will resume, contingent on renewed
efforts at fiscal consolidation, which is anticipated in the new administration’s economic policy agenda
and the yet-to-be-presented 2025 budget statement. The Bank’s latest inflation forecast shows a steady
decline and return to the path of disinflation, with an extended time horizon of achieving the mediumterm target of 8±2 percent.

20.
Under the circumstances, the Committee decided to keep the monetary policy rate unchanged at
27.0 percent.


D. Informational Note

The next Monetary Policy Committee (MPC) meeting is scheduled for March 25-28, 2025. The Meeting
will conclude on Monday, March 31, 2025, with the announcement of the policy decision.