We remain alert to external vulnerabilities – Bank of Ghana Governor

The Bank of Ghana (BoG) has made structural reforms to improve credibility and transparency, Governor Dr Johnson Asiama has said.

He said that the BoG now publishes individual Monetary Policy Committee (MPC) voting positions and releases policy decisions on the same day.

“These changes are not cosmetic. They are part of building an institution that communicates clearly and acts predictably,” he said during the 9th edition of the CEOs Summit held in Accra on Monday, May 25.

Dr Asiama further stated that recent business confidence surveys reflect the highest levels in seven years, supported by easing inflation, credit flows, and renewed optimism about Ghana’s  growth path.

“At the same time, we remain alert to external vulnerabilities – from disinflation divergence in global financial markets to the proposed 5% U.S. tax on outbound remittances. These risks remind us that vigilance is still required,” he said.

He also indicated that Ghana’s growth prospects remain strong as its real sector indicators are all pointing to a pickup in economic activity, that are mainly driven by exports, credit to the private sector, and construction activities.

Also, the Ghana Purchasing Managers’ Index rose above the 50-benchmark as output and new orders increased, signaling improved growth prospects.

Similarly, the latest confidence surveys have shown significant improvement in consumer and business indices, the highest in the last seven years, mainly based on easing inflationary pressures and optimism about macroeconomic conditions.

“Headline inflation has declined steadily over the past four months, reaching 21.2 per cent in April, down by 2.6 percentage points since the beginning of the year. Gross international reserves have improved to US$11 billion, equivalent to 4.2 months of import cover. And the cedi has appreciated by 24.1 per cent against the US dollar year to date.

“Let me emphasize: the central bank is NOT using its international reserves to support the cedi, or to engineer an appreciation in the cedi. The strengthening of the currency reflects a blend of disciplined monetary policy, tailored FX auction reforms, enhanced remittance channels, and stricter market surveillance, not mere short-term interventions.

“Last week, the Monetary Policy Committee met and voted unanimously to maintain the policy rate at 28 per cent. This decision reflects our commitment to completing the disinflation process, with inflation now projected to return to our target band of 8±2 per cent by the first quarter of 2026.

“As part of that strategy, effective June 5, we are also amending the Cash Reserve Ratio (CRR) requirement. Banks will now maintain CRRs in the same currency as their liabilities – foreign currency reserves for foreign currency deposits, and cedi reserves for domestic deposits. This supports better FX risk alignment and encourages more efficient liquidity planning,” he said.

 

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