The Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) has announced its decision to maintain the policy rate at 27%, citing persistent inflationary pressures and uncertainties in the global economic environment.
The announcement was made during the first Monetary Policy Committee press briefing for 2025, held at the Bank’s newly commissioned headquarters, Bank Square, in Accra.
Governor Dr. Ernest Addison explained that the decision reflects the Bank’s cautious approach, as inflation remains elevated despite efforts to control it.
Ghana closed in 2024 with an end-year inflation rate of 23.8%, significantly missing its target of 15%. December’s inflation marked the highest in eight months, driven primarily by soaring food prices.
Dr. Addison attributed this to adverse climate conditions, including dry spells in key agricultural regions and delayed onset of rains, which disrupted food production.
“The inflation profile remains elevated, largely driven by food price movements, especially in the last quarter of the year. Climate factors, including dry spells in some parts of the food-growing communities of the country and the late onset of rains, negatively affected production,” Dr. Addison stated.
Supply chain disruptions also exacerbated food price increases, further complicating efforts to meet the inflation target.
Focus on Disinflation and Fiscal Consolidation
Despite the inflationary challenges, Dr. Addison expressed optimism about resuming the disinflation process, emphasizing the importance of fiscal discipline under the new administration’s economic policy agenda. He noted that the yet-to-be-presented 2025 budget statement would play a pivotal role in shaping the country’s fiscal consolidation efforts.
“While the inflation outturn for 2024 deviated from the target, it is expected that the disinflation process will resume, contingent on renewed efforts at fiscal consolidation which are anticipated in the new administration’s economic policy agenda and the forthcoming 2025 budget statement,” he added.
Monetary Policy Outlook
Ghana’s current inflation rate of 23.8% remains far above the BoG’s medium-term target of 8% ± 2%.
However, the Bank’s latest forecasts suggest a gradual decline in inflation over time, although it acknowledges that achieving the target will take longer than initially anticipated.
“The Bank’s latest inflation forecast shows a steady decline and a return to the path of disinflation, with an extended timeline for achieving the medium-term target of 8% ± 2%.
Under these circumstances, the Committee decided to keep the monetary policy rate unchanged at 27%,” Dr. Addison explained.
