BoG boss credits firm policy for inflation, cedi gains

Governor of the Bank of Ghana, Dr. Johnson Pandit Asiama, has attributed the sharp improvement in inflation and currency stability in 2025 to deliberate and disciplined monetary policy decisions taken earlier in the year.

Speaking at the 2025 Governor’s Day and Annual Bankers’ Dinner in Accra, Dr. Asiama said the biggest challenge he inherited upon assuming office was not a lack of policy tools, but a collapse in confidence across markets.

“The challenge at the time was the erosion of confidence, in signals, in coordination, and in the consistency of policy implementation,” he said, explaining that market behaviour reflected uncertainty rather than conviction.

According to him, restoring order required firm but measured action. He pointed to the Monetary Policy Committee’s decision to increase the policy rate by 100 basis points in March as a turning point.

“This was not about signaling toughness for its own sake,” Dr. Asiama stated. “It was about reinforcing the Bank’s commitment to disinflation and anchoring inflation expectations.”

He said the policy stance was supported by governance reforms within the MPC, including transparent majority voting and the publication of individual votes, which strengthened accountability and credibility.

Operational changes followed, with reforms to the cash reserve requirement, the widening of the policy rate corridor, and tighter net open position limits to reduce speculative activity on bank balance sheets.

“These changes reshaped liquidity planning, treasury behaviour, and market pricing across the system,” the Governor noted.

Dr. Asiama said the impact was swift and visible. Inflation, which exceeded 23 percent at the beginning of 2025, fell steadily into single digits by November, reaching levels last seen in 2019. Over the same period, the cedi appreciated cumulatively by more than 20 percent.

“The appreciation reflected a return of order rather than speculation,” he said.

With inflation expectations better anchored, the MPC was able to cut the policy rate by a cumulative 1,000 basis points over the year, a move Dr. Asiama said would not have been credible without earlier discipline.

He added that confidence also returned to the fixed income market, where trading volumes more than doubled by October compared to the previous year.

“These outcomes did not happen by chance,” Dr. Asiama said. “They reflected coherence across policy, operations, communication, and market conduct.”