Middle East conflict could spike inflation – Johnson Asiama

Governor of the Bank of Ghana, Johnson Pandit Asiama, warns that the Middle East conflict could trigger imported inflation for Ghana despite improving domestic economic indicators.

Opening the 129th Monetary Policy Committee meeting, Dr. Asiama said recent geopolitical developments have introduced new risks to Ghana’s inflation outlook even as local economic conditions improve.

He noted that the escalation of conflict in the Middle East has disrupted important energy and shipping corridors, creating volatility in global oil markets.

“The escalation of conflict in the Middle East has disrupted key energy and shipping corridors, increased volatility in global oil markets, and introduced new uncertainty into the trajectory of global inflation,” the governor said.

According to him, such global developments could have direct implications for Ghana through higher import costs, particularly in the energy sector.

“For Ghana, the spillover channels are clear. Sustained oil price increases raise the risk of imported inflation,” Dr. Asiama stated.

He explained that rising oil prices would likely increase domestic price pressures, potentially forcing policymakers to consider tighter monetary policy to maintain price stability.

“Sustained oil price increases raise the risk of imported inflation, which could necessitate policy tightening with implications for financial conditions,” he added.

Despite the external risks, Dr. Asiama indicated that Ghana’s domestic economic indicators remain encouraging.

He disclosed that headline inflation declined to 3.3 percent in February, marking the fourteenth consecutive monthly decline and bringing inflation below the country’s medium-term target band.

The governor also reported improvements in Ghana’s external buffers, revealing that gross international reserves have increased to about 14.5 billion dollars, equivalent to 5.8 months of import cover.

Economic activity has also strengthened, with the Composite Index of Economic Activity expanding by 8.4 percent year-on-year at the start of 2026.

However, Dr. Asiama emphasised that the Monetary Policy Committee must weigh these domestic gains carefully against emerging global uncertainties.

“The external shock we face today is different from the conditions we confronted in January,” he noted, adding that policymakers must remain cautious to ensure the country’s progress on inflation and economic stabilisation is sustained.