Dr. Johnson Asiama and the MPC addressing journalists
The Bank of Ghana (BoG), has reduced its Monetary Policy Rate (MPR) from 28% to 25% due to improvement in macro-economic conditions.
The Governor of the Bank of Ghana (BoG), Dr. Johnson Asiama who announced this during the 125th Monetary Policy Comitttee press briefing said headline inflation has declined further to 13.7% in June 2025 from 18.4% in May since the last MPC meeting hence the need for the cut in the policy rate.
According to the Central Bank, the deceleration is attributed to the tight monetary policy stance, fiscal consolidation, easing food supply constraints, as well as the strong recovery of the cedi.
The Governor also stated that the Bank’s main core inflation measure, which excludes energy and utility items, has declined markedly as well as inflation expectations by banks, consumers, and businesses in line with the easing underlying inflation pressures.
He said July forecast also shows that headline inflation is expected to decline further in the third quarter of 2025 and trend within the medium-term target of 8±2 percent by the end of 2025, earlier than initial projections.
The BoG also noted that on the back of the strong external sector performance and increased reserve accumulation, the cedi has further strengthened against the major trading currencies citing instances where the cedi appreciated by 40.7 percent against the US dollar, 31.2 percent against the British pound, and 24.2 percent against the euro.
“Overall, the Committee noted that macroeconomic conditions have significantly improved, inflation expectations are broadly anchored, external buffers have strengthened, and confidence in the economy is returning”
“Given these considerations, the Committee, by a majority decision, voted to lower the Monetary Policy Rate by 300 basis points to 25.0 percent,” he stated.
He said potential supply chain challenges coming from the global trade tensions, and upward adjustment in utility tariffs are risks to the inflation outlook.
He, however, stated that the impact of the risks on inflation are expected to be offset by appropriately tight monetary policy stance and continued fiscal consolidation.
“On the domestic front, the economy was buoyant in the first quarter of 2025, with an annual GDP growth of 5.3 percent, compared to 4.9 percent in the same quarter of 2024, driven by increased activity in the agriculture and services sectors,” he said.
Dr. Asiama further indicated that external sector has improved markedly, with a record current account surplus of US$3.4 billion in the first half of 2025, supported mainly by higher prices and increased production volumes of gold and cocoa while the current account surplus, together with the outturns in the capital and financial accounts, culminated in an overall balance of payment surplus of US$2.2 billion, significantly higher than the US$588.5 million recorded in June 2024.
Touching on the banking sector, the Governor stated that Financial Soundness Indicators reflected continued asset growth, improved solvency, liquidity, profitability and efficiency in the first half of the year with a non-performing loan ratio easing in June 2025 on account of lower growth of non-performing loan stock relative to credit.
“The latest business and consumer confidence surveys reflected improved sentiments on the back of easing inflationary pressures and strong optimism about economic conditions,” he added.
By Ebenezer K. Amponsah