The Monetary Policy Committee (MPC) of the Bank of Ghana has reduced the Monetary Policy Rate by 250 basis points to 15.50 percent, citing significant improvements in macroeconomic conditions, sharply declining inflation, and strengthened external and fiscal positions.
The decision was taken at the MPC’s 128th regular meeting held from January 26 to 28, 2026, where members assessed recent economic developments and risks to the inflation and growth outlook. According to the Committee, stability has largely been achieved following sustained fiscal consolidation, tight monetary policy, and a significant build-up of external reserves.
Headline inflation declined sharply from 23.8 percent in December 2024 to 5.4 percent in December 2025, supported by currency appreciation, lower food and oil prices, and anchored inflation expectations across consumers and businesses. Core inflation, which excludes energy and utility prices, also eased, indicating muted underlying inflationary pressures.
Economic growth strengthened in 2025, with provisional data from the Ghana Statistical Service showing overall real GDP growth of 6.1 percent in the first three quarters of the year, up from 5.8 percent over the same period in 2024. Non-oil GDP expanded by 7.5 percent, driven mainly by the services and agriculture sectors. The Bank’s Composite Index of Economic Activity (CIEA) recorded robust growth of 8.8 percent in November 2025, reflecting improved trade, credit to the private sector, industrial production, and consumption.
Fiscal performance continued to improve, with the overall fiscal deficit on a commitment basis reduced to 0.5 percent of GDP as at November 2025, well below the target of 3.5 percent. The primary balance recorded a surplus of 2.8 percent of GDP, while public debt declined to 45.5 percent of GDP, down from 63.1 percent a year earlier.
The external sector also recorded strong gains. Ghana posted a provisional current account surplus of US$9.1 billion in 2025, supported by strong gold export earnings, increased private transfers, and moderated services and income payments. Gross international reserves rose to US$13.8 billion at the end of December 2025, equivalent to 5.7 months of import cover.
Reflecting improved reserves and prudent macroeconomic management, the cedi appreciated by 40.7 percent against the US dollar in 2025, a sharp turnaround from a 19.2 percent depreciation in 2024. The currency has remained relatively stable in the early weeks of 2026.
The Committee noted that while monetary conditions remain relatively tight, the easing of policy is expected to support stronger real sector recovery, job creation, and improved financial intermediation, without undermining price stability. It stressed, however, that sustaining the gains achieved will depend on continued fiscal discipline, strong policy coordination, and targeted interventions to contain food inflation amid global uncertainties.
The MPC indicated it will continue to closely monitor domestic and global developments and take appropriate policy actions to ensure that macroeconomic stability translates into sustainable and inclusive growth. The next MPC meeting is scheduled for March 16–18, 2026.
By: Daniel Orlando/newsalertgh.com
