Governor of the Bank of Ghana (BoG), Dr. Johnson Asiama, has cautioned that escalating geopolitical tensions in the Middle East could derail Ghana’s recent gains in reducing inflation, even as the country’s economic outlook shows signs of improvement.
Speaking at the opening of the central bank’s 129th Monetary Policy Committee (MPC) meeting, Dr. Asiama said the global environment has changed significantly since the committee last met, introducing fresh risks that could influence upcoming policy decisions.
According to him, the ongoing conflict in the Middle East is disrupting critical energy supplies and major international shipping routes, pushing global oil prices higher and creating uncertainty around the outlook for inflation worldwide. For Ghana, which depends heavily on imports, this could quickly translate into higher fuel prices, transport costs, and general increases in the cost of living.
He explained that prolonged increases in oil prices could lead to imported inflation and tighter global financial conditions, making borrowing more expensive for countries like Ghana.
While the situation poses clear risks, the Governor noted that geopolitical instability often drives gold prices upward. As a major gold producer, Ghana could benefit from stronger export earnings and an improved trade balance. However, he stressed that the overall effect is still likely to be inflationary.
Dr. Asiama also revealed that Ghana’s inflation rate has now dropped below the central bank’s target range, standing at 3.3 percent. Although this reflects significant progress, it presents a new policy challenge, as authorities must determine whether the current monetary stance remains appropriate as economic activity gradually recovers.
The committee will also review the government’s Ghana Accelerated National Reserve Accumulation Programme (GANRAP), an initiative aimed at boosting the country’s foreign reserves to about 50 months of import cover by 2028, compared to roughly 5.8 months at present. Stronger reserves would enhance Ghana’s ability to withstand external shocks, but the programme could also affect liquidity conditions and the central bank’s balance sheet.
On the financial sector, Dr. Asiama said Ghana’s banking industry remains stable, profitable, and well-capitalised, with asset quality improving over the past year. However, credit growth has been relatively modest, raising concerns about whether banks are cautious about lending or whether demand from businesses and households remains weak.
Despite improvements across several economic indicators, the Governor urged policymakers to remain cautious, stressing the need to balance domestic progress with rising global uncertainty.
The MPC is expected to announce its next Monetary Policy Rate decision on Wednesday, March 18, 2026 a move that will influence borrowing costs, investment activity, and overall economic momentum in the months ahead.
