Governor Asiama’s Remarks – 124th Monetary Policy Committee Meetings Opening Session
Source: bank_of_ghana
Date: 2025-05-21

124TH MONETARY POLICY COMMITTEE MEETINGS OPENING REMARKS BY DR. JOHNSON ASIAMA GOVERNOR, BANK OF GHANA 21ST MAY, 2025 AT THE BANK SQUARE, ACCRA Honourable Members of the Monetary Policy Committee, Distinguished Colleagues, and Invited Officials, Good morning and welcome to the 124th Meeting of the Monetary Policy Committee of the Bank of Ghana. We convene at a time when Ghana’s macroeconomic conditions are exhibiting early signs of stabilization, supported by recent policy actions and improving external and domestic fundamentals. But the path ahead remains complex and fraught with risks, both glo bal and domestic. This underscores the importance of today’s meeting and the decisions we are set to make. Let me begin by acknowledging the robust technical discussions during last week’s Staff-Level engagements. The enriched format now involving both internal advisors and external MPC members has significantly sharpened our focus on key policy issues. I encou rage staff to maintain this momentum as we delve into today’s presentations. Since our last meeting, we have witnessed further moderation in inflation. According to the Ghana Statistical Service, the inflation rate declined to 21.2 percent in April 2025 down from previous highs but still well above our medium-term target band of 8 ± 2 percent and breaching the upper consultation band of 19 percent. This inflation path has been shaped by a combination of monetary tightening, relative exchange rate stability, and easing non-food inflation. In March, the Committee responded decisively to the inflation outlook by raising the policy rate by 100 basis points to 28 percent. Preliminary evidence suggests this action has contributed to dampening inflation momentum. Importantly, the cedi has appreci ated sharply by nearly 19 percent between April and May, helping to ease imported inflation pressures and restore public confidence. The appreciation reflects a combination of factors, including prudent monetary policy, improved market sentiment, and external sector gains. We are also seeing encouraging signs of macroeconomic progress. Ghana has reached a Staff- Level Agreement with the IMF on the Fourth Review of the ECF Programme, and although some prior actions remain outstanding, the trajectory is clearly positive. The re cent S&P upgrade of Ghana’s sovereign rating from Selective Default to CCC+ further affirms this progress. External reserves have strengthened, the trade balance has improved, and consumer and business confidence indices are rising steadily. However, significant challenges persist. The inflation outlook, while improving, remains vulnerable to second -round effects, food supply constraints, especially from northern Ghana and the Sahel and external price shocks, particularly given volatile global commodity markets. Geopolitical tensions and evolving global trade dynamics, including the recent US -led tariff disputes, have heightened market uncertainty and could affect commodity prices, exchange rates, and financial flows in emerging markets like ours. In this context, the Bank has commenced a comprehensive review of its monetary policy implementation framework. We are transitioning from reliance on the unremunerated Cash Reserve Ratio to a more active Open Market Operations regime, including the use of longer - tenor BoG instruments. This is intended to enhance policy transmission, improve liquidity management, and allow greater room for credit expansion to the private sector. As we approach our deliberations, we must carefully assess whether the current monetary policy stance remains adequate to drive disinflation without undermining the fragile growth momentum. Key questions include: • Is the observed exchange rate appreciation sustainable? • How durable is the nascent return of market confidence? • What are the implications of these dynamics for our inflation forecast over the medium term? I must also emphasize the critical role of our post -meeting communiqué. It must clearly articulate the rationale behind our policy decisions and provide an accessible, transparent account of recent economic trends. This is essential for anchoring expectations and sustaining public trust in our commitment to price stability. Colleagues, let us approach today’s meeting with the professionalism, rigour, and independence that this Committee represents. Our credibility depends on our ability to respond decisively and proportionately to evolving economic realities. With these remarks, I formally declare the 124th Meeting of the Monetary Policy Committee open. Thank you.