Central Bank maintains policy rate at 14% amid inflationary pressures

The Bank of Ghana has maintained its Monetary Policy Rate at 14 per cent, citing renewed global uncertainties and rising inflationary risks.

The decision was taken unanimously by the Monetary Policy Committee (MPC) during its 131st regular meeting in Accra to safeguard price stability while supporting economic growth.

Announcing the outcome, the Governor of the Bank of Ghana and Chairman of the MPC, Dr Johnson Pandit Asiama, said the current policy rate remained appropriate as the central bank monitored both domestic and external economic developments.

He explained that heightened geopolitical tensions, particularly in the Middle East, had disrupted global energy markets and created fresh risks for inflation.

“These developments present upside risks to the inflation outlook, particularly through higher fuel and utility prices, and could tighten global financing conditions with implications for emerging economies such as Ghana,” he said.

Dr Asiama said Ghana’s economy continued to demonstrate resilience despite external challenges. Real Gross Domestic Product (GDP) growth reached 6.4 per cent in the first quarter of 2026, driven largely by strong performances in the services and industrial sectors.

He added that the Bank’s Composite Index of Economic Activity grew by 13.4 per cent in May 2026, supported by increased private sector credit, stronger industrial production, improved trade activity and higher tourist arrivals.

The Governor noted that headline inflation increased to 5.3 per cent in June from 3.7 per cent in May due mainly to base effects and temporary increases in transport fares linked to higher global crude oil prices. However, he stressed that inflation remained below the Bank’s medium-term target range of 8 ± 2 per cent.

Dr Asiama said monetary conditions had improved significantly over the past year, with Treasury bill rates, the Ghana Reference Rate and average lending rates all recording substantial declines. These developments contributed to a 41.2 per cent increase in private sector credit growth in June.

He also indicated that the banking sector remained stable, supported by improved profitability, stronger capital buffers and better asset quality. The Capital Adequacy Ratio rose to 20.4 per cent, while the Non-Performing Loans ratio declined from 23.1 per cent to 16.1 per cent over the past year.

On the external front, Ghana recorded stronger trade and current account balances in the first half of 2026, driven by robust gold and cocoa exports. Gross international reserves reached US$12.9 billion by the end of June, providing five months of import cover.

Looking ahead, Dr Asiama said the MPC expected inflation to gradually return to the target band but warned that geopolitical tensions and possible increases in utility tariffs remained key risks.

He assured that the Committee would continue to monitor developments closely to maintain price stability and support the country’s economic recovery. The next MPC meeting will be held from September 22 to 24, 2026, with the policy decision scheduled for announcement on September 24.

Among other reasons, maintaining the rate at 14 per cent would help keep inflation within its medium-term target while avoiding unnecessary pressure on borrowing costs.