Governor’s Opening Remarks at the 123rd MPC Meetings
Source: bank_of_ghana
Date: 2025-03-24

123RD MONETARY POLICY COMMITTEE MEETINGS OPENING REMARKS BY DR. JOHNSON ASIAMA GOVERNOR, BANK OF GHANA 24TH MARCH, 2025 AT THE BANK SQUARE, ACCRA Good morning, esteemed colleagues. Let me extend a warm welcome to all of you to this 123 rd regular meeting of the Monetary Policy Committee. I want to thank each of you—both internal and external members—for your continued service and commitment to this vital process. Though this is my first MPC meeting as Governor, I am certainly no stranger to the MPC process. During my time as Deputy Governor, I had the opportunity to engage deeply in MPC deliberations. Since then, I have continued to follow the work of the Committee closely, and it is both an honour and a privilege to now chair this important institution at such a critical time in our economic journey. Let me also take a moment to acknowledge and commend the external members of the Committee—Professors Joshua Abor and Ebo Turkson—for their long-standing contributions to the MPC. Just last week, Prof. Abor launched a timely publication on monetary policy in emerging markets, reaffirming the continued relevance of inflation targeting and the importance of credible, forward-looking central banks. As we begin today’s deliberations, I want to reflect briefly on two institutional areas I believe we can further strengthen going forward: the transparency of our decision-making process and the communication of our forward-looking guidance. There’s a growing sense in public commentary that MPC decisions are taken behind closed doors without clear, data-driven reasoning. To counter this, I am proposing that we implement mechanisms to make the Committee’s decision factors more accessible—whether through publishing voting outcomes or enhancing the narrative content of our policy statements. Similarly, we need to work on simplifying the way we present forecasts so the public and market participants can better understand the underlying policy story. These changes, in my view, will strengthen our credibility and deepen trust in the policy framework. Now turning to the macroeconomic context in which we meet. While inflation is easing, it remains uncomfortably high, at over 23 percent, and progress has been slow, particularly on a month-on-month basis. For instance, structural drivers of food inflation remain persistent. The external environment, though currently supportive, is becoming increasingly volatile. We’ve seen a strong trade surplus and solid reserve build-up on the back of gold exports and remittance flows. But a possible escalation in global tariff wars, rising geopolitical tensions, and weakening Chinese demand could quickly shift the dynamics. These global factors could also have spillover effects on inflation, capital flows, and exchange rate stability. Domestically, the 2024 fiscal outturn was expansionary, with the deficit exceeding program targets. We have seen encouraging signs of consolidation early in 2025, but questions remain as to whether current measures are adequate to anchor expectations and satisfy upcoming IMF program reviews. Financial conditions are evolving quickly. Liquidity in the system has increased, commercial banks have raised concerns about the CRR framework, and we must carefully assess its macro-financial implications—especially with respect to inflation, foreign exchange demand, and credit growth. While private sector credit is recovering in nominal terms, real credit growth remains modest. Banks are still cautious, and NPL levels remain a concern. Meanwhile, our microfinance and rural banking sectors are showing early signs of stability, but recapitalization and regulatory reforms must continue to preserve confidence. We must also acknowledge that some of today’s challenges stem from earlier monetary and fiscal policy missteps—particularly loose fiscal policy during periods of macro stress, weak monetary-fiscal coordination, and delays in key structural reforms. These contributed to elevated inflation, impaired policy transmission, and a loss of credibility. It is essential that we reflect on these issues—not to assign blame, but to strengthen our institutions and avoid repeating past mistakes. There are also deeper, structural issues we must not lose sight of—such as underinvestment in agriculture, persistent exchange rate misalignments, and the need to deepen domestic financial markets. These are outside the scope of today’s immediate rate decision, but they will shape the broader monetary policy landscape over the medium term. In short, we are facing a convergence of risks: stubborn inflation, elevated liquidity, soft real interest rates, a fragile fiscal recovery, and growing external uncertainty. But we also have buffers—strong reserves, improving sentiment, and the credibility of our policy framework— to guide us. Our task over the next few days is to weigh these developments rigorously, and to reach a policy stance that reinforces the disinflation path without undermining the recovery or destabilizing market expectations. I trust that our discussions will be candid, evidence-based, and guided by our shared mandate of maintaining price stability and supporting sustainable growth. With these reflections, I now formally declare the 123rd meeting of the Monetary Policy Committee open. I invite the team to begin with the macroeconomic briefing. Thank you.