…central bank’s MPC adjudges upside and downside risks balanced
By Toma Imirhe
After considering the upside and downside dynamics currently impacting on the performance of the country’s economy, the Bank of Ghana’s Monetary Policy Committee (MPC) on Wednesday, July 22, 2026 unanimously decided to retain its benchmark Monetary Policy Rate (MPR) at 14%. This is the second consecutive time it has opted to do so, following a similar decision at its previous meeting in late May. The last time it cut the MPR was in March when it slashed 150 basis points off its hitherto 15.5% - to settle the rate at its current 14% - which marked the final phase of aggressive monetary easing which halved the MPR cut from 28% in July 2025 over five consecutive MPC meetings.
The latest decision to maintain the pause on further monetary easing was widely expected by economists, monetary policy analysts and public policy commentators.
The Bank of Ghana’s primary objective is to curb inflation which has risen for the part three monthly readings from a trough of 3.2% in March this year to 5.3% in June. This has reversed a continuous sharp decline in headline inflation from around 15% at the start of 2025. On the other hand economic growth – the central bank’s other primary objective - remained resilient in the first quarter of 2026.
Real GDP growth was 6.4%, driven by the services and industry sectors, compared with 6.2% growth recorded in the same quarter of 2025. The Bank’s Composite Index of Economic Activity (CIEA), which tracks high frequency real sector indicators, pointed to a sustained increase in economic activity. The CIEA recorded annual growth of 13.4% in May 2026 compared with 4.4% in May 2025. Credit to the private sector, international trade activities, industrial production, and tourist arrivals, all contributed to the improved economic performance during the period. The latest confidence surveys, conducted in June 2026 showed positive consumer and business sentiments, supported by optimism about growth prospects, subdued inflation, and declining lending rates.
Explained Bank of Ghana Governor, Dr Johnson Asiama – who doubles as the Chairman of the seven member MPC – when announcing the Committee’s latest decision on Wednesday, “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 allowing time to assess the evolving geopolitical developments and their potential impact on the domestic economy.”
Dr Asiama ascribed the resurgence of headline inflation (which has impacted both food and non-food inflation) to base drift effects and a temporary increase in transport fares, following the surge in crude oil prices experienced during the period. However he noted that while survey based inflation expectations among consumers, businesses, and the banking sector rose broadly, they remained anchored within the central bank’s target band of between 6% and 10%
In arriving at its decision to retain the MPR at 14% the MPC balanced upside and downside risks to the economy.
Upside risks identified and considered by the MPC included the potential for increases in utility tariffs, the renewed political tensions and military conflicts in the Middle East, and their effects on crude oil price and wider shipping costs. Indeed Brent crude oil has risen to as high as US$95 per barrel, after falling to close to US$70 less than a fortnight ago in the wake of the short-lived truce between the United States and Iran.
On the downside however, the MPC has considered that continued fiscal consolidation, strong gross international reserves and an appropriately calibrated monetary policy stance should help moderate these risks
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 allowing time to assess the evolving geopolitical developments and their potential impact on the domestic economy.
Consequent to the MPC’s latest decision to retain the MPR at the same level it has been at since March, it will remain at 14% at least until the next meeting and subsequent decision of the Committee two months from now. Therefore interest rates on both loans and deposits are expected to remain roughly within the same band that has obtained during the second quarter of this year.
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