By Issah Olegor
The Bank of Ghana (BoG) has maintained its benchmark Monetary Policy Rate (MPR) at 14 percent, opting for caution amid mounting global uncertainty, renewed inflationary pressures and escalating geopolitical tensions in the Middle East that threaten to disrupt the macroeconomic stability.
The decision was reached unanimously by the Bank’s Monetary Policy Committee (MPC) at its 131st regular meeting held from July 20 to 22, 2026, signalling the central bank’s determination to safeguard recent gains in inflation control while closely monitoring evolving global economic developments before considering any further monetary easing.
Announcing the committee’s decision at a press conference in Accra, Governor Dr. Johnson Pandit Asiama said although the economy continues to record strong growth and inflation remains relatively subdued, policymakers considered it prudent to keep interest rates unchanged until there is greater clarity on the potential impact of rising crude oil prices and geopolitical developments on domestic inflation.
According to the Governor, renewed conflict in the Middle East, together with the closure of the Strait of Hormuz, has reignited volatility in global energy markets, pushing crude oil prices above US$85 per barrel and increasing the risk of imported inflation for countries such as Ghana.
He warned that possible increases in utility tariffs, coupled with rising global energy costs, could exert additional upward pressure on domestic prices in the months ahead.
“Potential upward adjustments in utility tariffs together with escalating geopolitical tensions in the Middle East and the associated increase in crude oil prices present upside risks to the inflation outlook,” Dr. Asiama stated.
He explained that while these external risks remain significant, continued fiscal discipline by the government and the Bank of Ghana’s carefully calibrated monetary policy should help moderate inflationary pressures over the medium term.
“Given these considerations, the Monetary Policy Committee, by a unanimous decision, maintained the monetary policy rate at 14.0 percent. The Committee judged that the current policy stance remains appropriate to guide inflation into the medium-term target band while allowing time to assess the evolving geopolitical developments and their potential impact on the domestic economy,” the Governor added.
The latest decision follows recent comments by Dr. Asiama at the opening of the same MPC meeting, where he acknowledged that Ghana’s prolonged period of disinflation had come to an end after headline inflation rose for three consecutive months—from 3.2 percent in March to 5.3 percent in June 2026.
Although inflation remains well below the Bank’s medium-term target ceiling of 10 percent and significantly lower than the 13.7 percent recorded a year earlier, policymakers are now assessing whether the recent increase represents a temporary normalisation or the beginning of a more persistent inflationary trend.
Despite the cautious monetary policy stance, the Bank reported that the economy continues to demonstrate remarkable resilience. Real Gross Domestic Product (GDP) expanded by 6.4 percent during the first quarter of 2026, up from 6.2 percent recorded during the corresponding period last year.
The Bank’s Composite Index of Economic Activity also recorded robust annual growth of 13.4 percent in May 2026, compared with 4.4 percent a year earlier, reflecting stronger economic momentum across several sectors of the economy.
According to the MPC, the improved economic performance has been driven by stronger private sector credit expansion, increased international trade activities, higher industrial production and a rebound in tourism.
Private sector lending recorded one of its strongest recoveries in recent years. Credit growth accelerated sharply to 41.2 percent in June 2026 from 8.6 percent during the same period in 2025.
After adjusting for inflation, real private sector credit expanded by 34.1 percent, indicating renewed business confidence and improving access to financing.
The Bank attributed part of the recovery to lower borrowing costs following earlier reductions in the Monetary Policy Rate.
Average lending rates declined substantially to 15.6 percent, compared with 27 percent a year earlier, providing significant relief to businesses and households seeking credit.
The external sector also remained one of Ghana’s strongest economic pillars during the first half of the year. Supported by robust earnings from gold and cocoa exports, the country’s trade surplus increased to US$8.8 billion, up from US$5.8 billion during the same period in 2025.
Similarly, the current account surplus widened to US$5.1 billion from US$4.1 billion, reflecting stronger export performance and improved external balances.
However, the gross international reserves declined moderately to US$12.9 billion at the end of June 2026, equivalent to approximately five months of import cover, compared with US$13.8 billion, or 5.7 months of import cover, recorded at the end of December 2025.
Dr. Asiama explained that the decline largely resulted from increased energy-related payments arising from higher global oil prices following the renewed Middle East conflict. Nevertheless, he emphasised that Ghana’s reserve position remains sufficiently strong to cushion the economy against external shocks.
The Governor also disclosed that although the Ghana cedi experienced temporary pressure during May, the currency has since stabilised. As of July 17, 2026, the cedi had recorded a cumulative depreciation of 9.5 percent against the US dollar for the year.
The Monetary Policy Committee expressed confidence that continued fiscal consolidation, prudent monetary management and favourable domestic economic fundamentals will help contain inflationary risks while sustaining economic growth.
The Bank of Ghana is scheduled to hold its 132nd Monetary Policy Committee meeting from September 22 to 24, 2026, with the next policy rate decision expected to be announced on September 24, as policymakers continue to balance inflation control with support for the ongoing economic recovery.
