BoG Holds Policy Rate At 14% As Inflation Ticks Up To 5% In August

The Bank of Ghana has maintained its Monetary Policy Rate at 14.0 percent, citing broadly balanced risks to inflation and growth despite a slight uptick in inflation and rising global pressures.

The decision was taken unanimously at the 132nd regular meeting of the Monetary Policy Committee (MPC) held from September 23 to 24, 2026, the Committee announced in a press release on September 24.

Governor of the Bank of Ghana and Chairman of the MPC said the Committee assessed recent global and domestic developments and concluded that holding the rate was appropriate to sustain the recovery while keeping inflation expectations anchored.

Global picture: Oil above $100, central banks tightening

According to the MPC, global economic activity remained resilient in the first half of 2026, supported by strong investment in artificial intelligence and a less severe impact of energy shocks than anticipated, with the IMF holding its global growth projection at 3.0 percent for 2026.

However, global inflationary pressures have heightened since the last MPC meeting, driven by elevated energy costs with crude oil prices currently slightly above US$100 per barrel.

The Committee flagged additional risks from climate conditions, with expectations of a strong El Niño developing in the last quarter of the year, plus supply chain constraints that could push up food prices.

In response, major central banks have shifted from cautious stance to modest tightening. The US Federal Reserve, the European Central Bank and the Bank of Japan have raised policy rates, signalling possible further tightening – a move that could tighten global financing conditions for emerging and frontier economies like Ghana.

Ghana’s economy still strong

On the domestic front, growth remained strong. Real GDP grew by 6.0 percent in the second quarter of 2026, driven by services and industry, though slightly lower than the 6.6 percent recorded in the same quarter of 2025. Non-oil GDP growth was 5.4 percent compared with 8.5 percent a year earlier.

The Bank’s Composite Index of Economic Activity (CIEA) recorded strong annual growth of 14.9 percent in July 2026, compared to 6.1 percent in July 2025, supported by private sector credit, international trade and consumption.

Consumer and business confidence surveys in August also showed positive sentiments on the back of a relatively stable macroeconomic environment.

Headline inflation increased to 5.0 percent in August from 4.6 percent in July, driven mainly by non-food inflation which rose to 6.8 percent from 6.1 percent on the back of pass-through effects from upward adjustments in utility tariffs and elevated crude prices. Food inflation remained low, declining marginally to 3.0 percent from 3.1 percent due to improved supply.

Despite the increase, headline inflation remains below the lower bound of the medium-term target range of 8±2 percent. Core inflation, which excludes energy and utility, eased slightly to 4.2 percent from 4.3 percent, while survey-based inflation expectations declined.

Monetary aggregates expanded, with reserve money growing 29.7 percent year-on-year in August 2026 compared to 4.5 percent a year earlier, driven by net domestic assets following changes in reserve requirements. Broad money supply grew 20.4 percent, up from 16.6 percent.

Interest rates continued to moderate. The 91-day Treasury bill rate declined to 5.4 percent from 10.3 percent a year earlier, while average bank lending rate fell to 15.9 percent from 24.2 percent. This supported a sharp rebound in credit – private sector credit grew 35.5 percent in August compared to 13.3 percent last year, with real growth at 29.0 percent versus 1.7 percent.

Fiscal and banking sector improves

Provisional budget data for the first seven months of 2026 showed improved revenue mobilisation and constrained spending. The overall fiscal deficit on commitment basis was GH¢3.5 billion (0.2% of GDP) against a target of GH¢31.0 billion (1.9% of GDP), financed largely domestically. The primary balance recorded a surplus of 1.4 percent of GDP against a target of 0.2 percent.

Public debt stock stood provisionally at 45.9 percent of GDP at end-July 2026, up from 44.7 percent at end-December 2025.

The banking sector remains solvent, profitable and liquid. Total assets rose 20.5 percent year-on-year to GH¢500.2 billion in August, Capital Adequacy Ratio improved to 19.1 percent from 18.3 percent, and the Non-Performing Loan ratio declined to 15.7 percent from 20.8 percent, though credit risk remains elevated.

External sector robust, reserves at $12bn

The external sector maintained robust performance. The trade surplus improved to US$8.85 billion in the year to August 2026 from US$6.69 billion last year. Total exports rose to US$22.4 billion from US$17.9 billion on strong gold, cocoa and crude oil receipts. Imports totalled US$13.58 billion, up 20.8 percent from US$11.24 billion, driven by oil and gas imports for domestic refining.

Gross International Reserves stood at US$12.0 billion as at September 22, 2026, equivalent to 4.5 months of import cover, supported by improved gold export receipts.

The MPC noted upside risks to inflation from utility tariff revisions, rising ex-pump prices and transport fares, a strengthening US dollar, and global supply constraints, while fiscal consolidation, improved food supply and exchange rate stability present downside risks.

With risks broadly balanced, the Committee voted to hold the rate at 14.0 percent.

The next MPC meeting is scheduled for November 16 to 18, 2026, with the policy decision to be announced on November 18.