The Bank of Ghana has taken a significant step towards enhancing its monetary policy formulation process. This move is aimed at increasing transparency and accountability in policymaking. The Bank has shifted from consensus-based decision-making to a majority vote system, similar to other major central banks. As part of this enhancement, the Bank will publish decision statements from each Monetary Policy Committee (MPC) member.
The 123rd MPC meetings, held from March 24-26, 2025, saw members vote to increase the Monetary Policy Rate (MPR) by 100 basis points to 28.0 percent. This decision was made to reinforce the Bank’s commitment to ensuring price stability. In addition to the MPR increase, the Bank will introduce a 273-day instrument to augment its sterilization toolkit, intensify monitoring of banks’ Net Open Positions, and review the current structure of the Cash Reserve Ratio.
The MPC members presented their individual decision statements, highlighting their perspectives on the global and domestic economic outlook. Member 1 noted that global growth was resilient in 2024, supported by real income growth and lower interest rates. However, global inflationary pressures persisted, and policy decisions varied across central banks. On the domestic front, Member 1 observed significant growth in broad money supply and improving banks’ credit to the private sector.
Member 2 emphasized the need to address the stickiness of inflation, which has stayed around 23.0 percent. Member 2 also highlighted excess liquidity conditions in the banking system and the emergence of financial repression. Member 3 noted that the global disinflationary process has stalled in some countries due to rising inflation. On the domestic market, Member 3 observed that the Ghana cedi has been relatively stable, supported by the Bank of Ghana’s Gold Purchase Programme.
Member 4 pointed out that global growth was resilient in 2024, but recent developments have heightened uncertainty. On the domestic front, Member 4 noted that the external payments position continued to improve, driven by increased gold exports and robust remittance inflows. Member 5 emphasized that headline and core inflation rates are gradually declining but remain above the target range, necessitating cautious monetary policy actions.
The majority decision to increase the MPR by 100 basis points aims to reinforce the Bank’s commitment to ensuring price stability. The Bank’s enhanced monetary policy formulation process is expected to promote transparency and accountability in policymaking.
Ruth Abla ADJORLOLO
