Global inflation is expected to remain high in the near-term – BoG Boss

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, Governor of the Bank of Ghana, Dr Johnson Asiama has said.

He says that 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, he said “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.”

Dr Asiama further stated that 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, he said, 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,” Dr Asiama said during the 123rd Monetary Policy Committee press conference held in Accra on Friday, March 28.

Regarding the Policy Rate, the MPC, by a majority decision, decided to increase it from 27 per cent to 28.

Dr Asiama said that “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.

Read Also: Monetary Policy Committee of Bank of Ghana raises Policy Rate to 28%

“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.

“Under the circumstances, the Committee, by a majority decision, decided to raise the Monetary Policy Rate by 100 basis points to 28 percent to re-anchor the disinflation process. As inflation becomes firmly anchored, the Committee will reassess the scope for a gradual easing in the policy stance,” he said.

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