The Monetary Policy Committee (MPC) of the Bank of Ghana has reduced the Monetary Policy Rate by 150 basis points to 14 per cent, citing continued improvements in domestic macroeconomic conditions amid rising geopolitical risks from the Middle East.
The decision was taken at the MPC’s meetings held from March 16 to 18, 2026, during which members reviewed recent global and domestic economic developments and assessed risks to the outlook for inflation and growth.
Dr Johnson Asiama told a press conference that the MPC noted that despite upside risks from global geopolitical tensions and higher crude oil prices, improved domestic conditions and high real interest rates provided room to ease the policy stance.
He said global conditions had weakened significantly since January due to heightened tensions in the Middle East, which have disrupted supply chains, increased crude oil price volatility and elevated financial stability concerns.
Although global inflation has generally eased, the renewed surge in oil prices could trigger tighter financing conditions as central banks reassess their policy stance.
On the domestic front, provisional data from the Ghana Statistical Service showed that Ghana’s economy expanded by 6 percent in 2025, up from 5.8 percent in 2024. Non-oil GDP recorded strong growth of 7.6 percent, driven mainly by the services and agriculture sectors.
High-frequency indicators from the Bank of Ghana also pointed to a continued recovery in economic activity, with the Real Composite Index of Economic Activity posting an 8.4 percent annual growth in January 2026. Increased credit to the private sector, improved industrial production and rising household and firm consumption supported the upturn.
Consumer and business confidence strengthened further in February, boosted by easing inflation, better operational performance and optimism about future economic prospects.
Headline inflation fell sharply to 3.3 percent in February 2026, from 5.4 percent in December 2025, reflecting declines in both food and non-food inflation. Core inflation also eased, signalling muted underlying price pressures.
Growth in monetary aggregates slowed significantly as the tight monetary policy stance continued to take effect. Reserve money contracted by 0.5 percent in February, compared with a growth of 68.8 percent a year earlier, while broad money growth moderated to 16 percent.
Interest rates on money market instruments declined markedly in the first two months of the year, amid lower inflation expectations and fiscal restraint. The average lending rate of banks also fell to 19.2 percent, from 30.1 percent a year earlier, contributing to a gradual rise in private sector credit.
Fiscal performance for January to December 2025 remained broadly in line with consolidation efforts, supported by spending controls despite revenue shortfalls.
The overall fiscal deficit on a commitment basis stood at 1 percent of GDP, below the target of 2.8 percent, while the primary balance recorded a surplus of 2.6 percent.
The provisional public debt stock declined significantly to 45.3 percent of GDP, from 61.8 percent in December 2024.
The banking sector remained stable with improved balance sheet performance. Total assets increased on the back of rising deposits, borrowings and shareholders’ funds. Investments grew by 57.5 percent, while the Non-Performing Loans (NPL) ratio declined to 18.7 percent, from 22.6 percent a year earlier.
The Bank, however, noted that the NPL level remains a key risk and said measures have been introduced to ensure full implementation of regulatory guidelines to reduce bad loans.
The external sector also showed strong performance at the start of the year. The trade surplus improved to US$3.7 billion for the first two months of 2026, driven by higher gold export earnings and modest import growth.
Gross international reserves increased to US$14.8 billion, equivalent to 5.8 months of import cover.
The cedi remained relatively stable, and reserve accumulation is expected to strengthen under the Ghana Accelerated National Reserve Accumulation Programme, which targets increasing import cover to 15 months by 2028.
The Committee said it would continue to monitor economic developments, especially geopolitical tensions in the Middle East, and stands ready to take necessary actions to safeguard price stability.
Source: businesspostonline
