BoG Maintains Policy Rate at 14% Amid Rising Global Uncertainty

The Bank of Ghana (BoG) has maintained its Monetary Policy Rate at 14 percent, citing balanced risks to inflation and economic growth despite rising global uncertainty triggered by escalating tensions in the Middle East.

Announcing the decision at the end of the 130th Monetary Policy Committee (MPC) meeting held from May 18 to 20, 2026, the central bank said inflationary pressures in Ghana remain subdued although global developments continue to pose risks to the domestic economy.

The MPC noted that the ongoing conflict in the Middle East has disrupted global trade flows, increased energy prices, and heightened policy uncertainty, prompting the International Monetary Fund (IMF) to revise downward its 2026 global growth forecast from 3.3 percent to 3.1 percent.

According to the Committee, the blockade of the Strait of Hormuz has triggered sharp increases in international crude oil prices, reigniting inflation concerns globally and raising the possibility of tighter monetary policies across major economies.

Despite the external challenges, Ghana’s economy recorded strong growth in the first quarter of 2026. The Bank’s Composite Index of Economic Activity (CIEA) expanded by 12.6 percent in March 2026, compared with 2.3 percent during the same period last year.

The growth was driven mainly by stronger private sector credit, industrial production, consumption, and international trade activities.

However, the BoG said consumer and business confidence softened slightly in April due to concerns over the possible domestic impact of the Middle East crisis. Ghana’s Purchasing Managers’ Index also declined marginally from 51.4 in March to 50.3 in April because of rising input costs.

Headline inflation rose marginally to 3.4 percent in April 2026 from 3.2 percent in March, marking the first increase since December 2024. The increase was largely attributed to higher non-food inflation.

The Committee, however, stressed that underlying inflationary pressures continue to ease, as reflected in the decline in core inflation. Inflation expectations among consumers, businesses, and financial institutions also remained broadly anchored within the medium-term target band.

On the monetary front, reserve money growth slowed significantly to 3.6 percent in April 2026 from 38 percent a year earlier, reflecting the impact of the central bank’s tight monetary policy stance.

Interest rates also continued to decline. The 91-day Treasury bill rate dropped sharply to 4.9 percent in April 2026 from 15.5 percent a year earlier, while average bank lending rates fell to 16.3 percent from 27.4 percent over the same period.

Private sector credit recorded strong growth of 28.7 percent in nominal terms, representing a real growth of 24.5 percent compared to a contraction recorded in April 2025.

The banking sector also showed signs of improvement, with the Capital Adequacy Ratio rising to 22.3 percent in April 2026 from 17.5 percent a year earlier. The Non-Performing Loan ratio declined to 18 percent from 23.6 percent.

In the external sector, Ghana’s current account surplus improved to US$3.10 billion in the first quarter of 2026 from US$2.43 billion during the same period last year, supported by strong gold and cocoa export earnings and stable remittance inflows.

Gross International Reserves increased to US$14.4 billion, equivalent to 5.7 months of import cover, compared to US$13.8 billion at the end of 2025.

The cedi, however, depreciated by 8.4 percent against the US dollar as of May 15, 2026, largely due to increased foreign exchange demand from the energy sector and corporate dividend payments.

The MPC indicated that while inflation is expected to rise gradually toward the medium-term target band due to exchange rate movements, transport fares, and food supply conditions, relative exchange rate stability and continued fiscal discipline should help contain risks.

As part of additional measures, the Committee announced a revision of the dynamic Cash Reserve Ratio to a uniform 20 percent requirement to be maintained in domestic currency, effective June 4, 2026.

The next MPC meeting is scheduled for July 20 to 22, 2026.