Ghana’s inflation outlook faces fresh risks ahead of the Bank of Ghana’s March 18 monetary policy decision amid rising geopolitical tensions in the Middle East.
The central bank has been cutting interest rates since July 2025 as inflation slowed at a record pace.
However, Governor Johnson Asiama has warned that recent developments could threaten the country’s disinflation progress.
The warning comes as global oil prices face upward pressure due to heightened tensions, even as gold prices strengthen.
Ghana, Africa’s largest gold producer, has benefited significantly from higher gold earnings in the past year, helping to stabilise its economy.
The central bank is expected to announce its latest interest rate decision on March 18.
What they are saying
At the opening of the Monetary Policy Committee meeting on Monday, Governor Asiama said the conflict in the Middle East could affect Ghana’s recent economic improvements.
- He noted that the U.S.-Israeli war against Iran poses a threat to the country’s inflation outlook through higher oil prices and tighter global financial conditions.
- He added that the same geopolitical uncertainty is supporting global gold prices, which could help offset some of the external pressure.
- “Today there is a … threat to the disinflation trajectory and whatever decision the committee takes, our communication must reflect both the progress that has been achieved and the risks that remain,” Asiama said.
His remarks signal that the central bank will balance inflation gains with emerging external risks in its policy deliberations.
Backstory
Ghana has implemented a series of monetary policy easing measures following a sustained decline in inflation. The central bank began cutting interest rates in July 2025 as price pressures moderated significantly.
- In January 2026, the apex bank slashed its main policy rate to 15.50%, following a 250-basis point cut driven by falling inflation.
- In November, the Bank of Ghana reduced its benchmark interest rate by 350 basis points to 18 percent.
- The November adjustment marked the third consecutive rate cut.
- The easing cycle has coincided with rapid improvements in inflation and broader economic conditions.
- Gold export earnings have played a major role in stabilising the economy.
Gold export revenues nearly doubled to around $20 billion in 2025, compared to $10.3 billion in 2024. The sharp increase contributed to a turnaround in Ghana’s current account position and strengthened external reserves.
More Insights
The recent geopolitical developments present a mixed outlook for Ghana’s economy. While higher oil prices could increase import costs and inflationary pressures, rising gold prices may provide significant foreign exchange support.
- Ghana relies heavily on imported petroleum products, making it sensitive to global oil price fluctuations.
- As a leading gold exporter, the country benefits from higher global bullion prices during periods of uncertainty.
- The central bank has indicated that its policy decisions will reflect both progress made in reducing inflation and emerging risks.
This dual exposure highlights the delicate balance facing policymakers as they assess the next phase of monetary policy.
What you should know
The Bank of Ghana’s March 18 decision will be closely watched by investors and market participants as the country navigates external volatility.
The central bank’s recent rate cuts have been supported by sustained inflation decline and improving macroeconomic indicators.
- Inflation has slowed significantly since mid-2025, prompting successive policy easing measures.
- Ghana continues to leverage a strong gold export performance to support economic stability.
