The Bank of Ghana’s (BoG) Monetary Policy Committee (MPC) is set to weigh renewed interest-rate easing against emerging inflationary and exchange-rate pressures when it meets this week to determine the next direction of the Monetary Policy Rate (MPR).
The 132nd MPC meeting, scheduled for September 23–24, 2026, will conclude with a policy announcement and press conference on Thursday, September 24.
The MPR has been maintained at 14.00 percent since March, and market participants and economists have narrowed the possibilities ahead of the meeting to either a modest reduction or a further hold.
The decision will come as Ghana’s macroeconomic conditions remain significantly stronger than in 2025, but with some indicators pointing to renewed pressure on domestic prices and the cedi.
Inflation remains below target
Headline inflation stood at 5.0 percent in August, up from 4.6 percent in July, but remains below the Bank’s medium-term target of 8 percent and its symmetric 6–10 percent target band.
However, the composition of inflation presents a more mixed picture.
Non-food inflation increased from 6.3 percent to 6.8 percent, while services inflation rose to 8.6 percent. Inflation for locally produced goods and services also remained significantly higher than that for imported items, pointing to growing domestic cost pressures.
Producer-price inflation similarly accelerated to 4.4 percent in August from 4.0 percent in July, with energy, mining and oil-related costs contributing to the increase.
The developments could make the MPC more cautious about the pace of any further monetary easing, particularly if higher energy prices feed into transport and production costs.
Growth strengthens case for easing
On the other hand, the economy continues to record relatively strong growth.
Ghana’s economy expanded by 6.0 percent year-on-year in the second quarter of 2026, while first-half growth reached 6.2 percent. Services recorded 8.0 percent growth, with non-oil GDP expanding by 5.4 percent.
The improvement in growth, alongside lower inflation, stronger reserves and fiscal consolidation, provides room for the MPC to consider further easing without necessarily prioritising additional monetary tightening.
Private-sector credit has also expanded strongly, with nominal growth reported at 41.2 percent year-on-year and real growth at 34.1 percent. This suggests that the transmission of earlier monetary easing into credit conditions is gaining traction.
External risks complicate decision
The external environment, however, has become less favourable.
Higher global oil prices linked partly to geopolitical tensions have created renewed inflation risks for oil-importing economies such as Ghana. At the same time, renewed pressure on the cedi could complicate the inflation outlook by increasing the domestic cost of imported goods and services.
Developments in the United States could add another layer of pressure. The US Federal Reserve raised its federal funds target range by 25 basis points to 3.75–4.00 percent on September 16, 2026.
A higher US policy rate can affect emerging markets through capital flows and exchange-rate channels, potentially narrowing the room for aggressive rate reductions in Ghana.
Market expectations
Ahead of the meeting, Databank Research has projected a 150-basis-point reduction, which would take the MPR from 14 percent to 12.5 percent.
The research house has cited continued disinflation, stronger credit growth and improvements in bank asset quality as factors supporting a resumption of the easing cycle.
Other analysts have pointed to the possibility of a smaller reduction or a hold, given the recent increase in headline and producer inflation and renewed exchange-rate and external pressures.
The key issue for the MPC, therefore, is likely to be the balance between the substantial gains made in macroeconomic stabilisation and the risks that could reverse part of those gains.
For borrowers, lenders, depositors and investors, Thursday’s decision will provide an important signal on whether the current easing cycle can resume and, if so, how quickly the central bank intends to reduce borrowing costs.
The outcome will also offer guidance on how the MPC assesses the sustainability of the recent improvement in inflation against the emerging risks from energy prices, the cedi and global financial conditions.
By: Toma Imirhe / businesspostonline
