Middle East conflict now biggest threat to inflation outlook – BoG Governor

Governor of the Bank of Ghana, Johnson Pandit Asiama, has warned that the prolonged Middle East conflict now poses the biggest threat to Ghana’s inflation outlook and broader economic stability.

Addressing the opening session of the 130th Monetary Policy Committee meeting in Accra on Monday, Dr. Asiama said rising global energy prices and supply-side pressures linked to the conflict were becoming increasingly dangerous for inflation management.

“The protracted Middle East conflict and sustained energy price elevation, the convergence of domestic energy supply disruptions and external cost-push pressures risks, which if not addressed could dislodge inflation expectations before they are firmly anchored,” he warned.

According to him, the crisis had evolved from a geopolitical concern into a major economic risk affecting countries across the world, including Ghana.

“The conflict has not abated, and its economic consequences are now visible in the global data,” he stated.

Dr. Asiama explained that the closure of the Strait of Hormuz had triggered sustained increases in global crude oil prices, worsening inflationary pressures for energy-importing economies.

“For a commodity-exporting, energy-importing economy such as Ghana, the transmission channels of this external shock are multiple and material – through fuel prices, transportation costs, import bills, and ultimately consumer price dynamics,” he said.

The Governor disclosed that inflation in Ghana had recorded its first increase since December 2024, while several central banks globally were being forced to reconsider monetary easing measures because of renewed inflation concerns.

“Early indicators point to a re-acceleration of headline inflation in several advanced and emerging market economies, prompting several central banks that had commenced easing cycles to pause or reverse course,” he noted.

Despite the risks, Dr. Asiama said Ghana’s economy continued to show signs of resilience amid the worsening global environment.

“That being said, the overall picture since end-March is one of a domestically resilient economy navigating an increasingly difficult external environment – with the energy price shock from the Middle East conflict now the central risk shaping the near-term outlook,” he stressed.