Ghana enters era of price stability — BoG Governor

Maclean Kwofi Business News Nov - 26 - 2025 , 17:29

The Governor of the Bank of Ghana (BoG), Dr Johnson Pandit Asiama, has said the country is on the verge of entering a new era of price stability, with inflation declining much faster than earlier projected.

He explained that the latest data pointed to a decisive shift in the country’s macroeconomic environment after years of volatility, as the disinflation trend had now pushed inflation firmly back within the target band.

The Governor stressed that headline inflation had now dropped to eight per cent, while core inflation indicators were holding between five and seven per cent—levels which indicate the strongest in several years.

“This economy has turned a decisive corner. Inflation has eased faster than we anticipated, the exchange rate has remained broadly stable, and our external buffers are strong.

“With inflation likely to settle between four to six per cent by year end, before stabilising around the target band in 2026, Ghana is entering what could become a multi-year period of price stability,” Dr Asiama said at the opening of the 127th Monetary Policy Committee (MPC) meeting in Accra on November 24.

Disinflation story

He stated that the country’s disinflation success story comes on the back of a combination of factors, including strict fiscal discipline, a cautious yet firm monetary policy stance and significant reforms in the foreign exchange operations framework.

He said these reforms have contributed significantly to improved transparency, stronger forex market performance, and growing investor confidence.

He said the BoG’s reserves have crossed $11 billion, equivalent to 4.8 months of import cover, marking the strongest external position in years.

He said projections suggest reserves could rise further to five months by the end of the year — a signal that the country’s external sector resilience was solidifying.

“The cedi has demonstrated resilience in 2025, supported by improved confidence, strong operational reforms in the forex market and robust trade and reserve inflows,” he said.

Strong economic fundamentals

Supporting the downward inflation trend, the Governor stated, was a broader improvement in macroeconomic conditions.

He explained that the real economy was showing clear signs of a durable revival, with the first half of 2025 recording 6.3 per cent gross domestic product (GDP) growth, driven by robust expansion in both the services and agriculture sectors.

He said non-oil GDP surged even higher to 7.8 per cent, underscoring the strength of domestic economic activity.

“High-frequency indicators tracked by the central bank also mirrored this momentum. The Composite Index of Economic Activity (CIEA) showed a significant nine per cent increase, while business and consumer confidence indices remained firmly positive.

“These gains confirm that the negative output gap is narrowing and that the economy is shifting from recovery to expansion,” he added.

Price stability

For households and businesses, Dr Asiama stated that the most encouraging signal was the possibility of a new era of price predictability.

With money supply growth significantly moderated and inflation projected to settle between four per cent and six per cent by year-end, he said the central bank was hopeful that the country could be entering a multi-year phase of stable prices — a foundation for sustained growth and job creation.

However, he said real interest rates have risen sharply due to the rapid decline in inflation.

He said this provides room for a gradual easing of the monetary policy rate, but cautioned that any policy adjustments must maintain credibility and prevent the erosion of the disinflation gains achieved so far.

Remaining vigilant

Despite the positive outlook, the Governor warned that global uncertainties—ranging from commodity price swings to geopolitical tensions and tighter external financing conditions—could test Ghana’s resilience.

“Domestically, pressures from taxes, utility adjustments and high credit costs still weigh on business activity,” he said.

He added that there was a need to strengthen financial sector stability and credit transmission, pointing out that while the banking sector remains broadly sound, a few institutions face recapitalisation and asset quality risks.