Governor of the Bank of Ghana, Dr Johnson Asiama, has cautioned that escalating tensions in the Middle East could threaten Ghana’s recent progress in bringing down inflation.
Speaking at the opening of the 129th meeting of the Monetary Policy Committee (MPC), Dr Asiama said developments in the global economy since the committee’s last meeting present new risks that could influence monetary policy decisions.
According to him, the conflict in the Middle East is already disrupting key global energy and shipping routes, creating instability in international oil markets.
Dr Asiama warned that sustained increases in crude oil prices driven by geopolitical tensions could feed into Ghana’s domestic economy through higher import costs.
“For Ghana, the transmission channels are clear. Sustained oil price increases could raise the risk of imported inflation and tighten global financial conditions,” he said.
The governor noted that the geopolitical situation could also bring some benefits to Ghana, particularly through rising gold prices.
“Geopolitical uncertainty tends to support gold prices. Given the importance of gold in our export earnings, this could improve our trade balance,” he said.
Despite the potential gains, Dr Asiama stressed that the overall risk outlook remains tilted towards renewed inflationary pressures, which the committee must carefully consider in its policy deliberations.
He also highlighted the country’s current inflation performance, revealing that Ghana’s inflation rate has fallen below the central bank’s target band.
“At 3.3 per cent, inflation is not only within the target band but has fallen below its lower limit,” he said.
The governor indicated that the committee will also examine the government’s newly introduced Ghana Accelerated National Reserve Accumulation Programme (GANRAP), an initiative aimed at significantly boosting the country’s foreign reserves.
The programme seeks to increase Ghana’s international reserves to the equivalent of 50 months of import cover by 2028, compared to the current level of about 5.8 months.
Dr Asiama said while stronger reserves would enhance the country’s economic resilience, such measures could have implications for liquidity conditions, the central bank’s balance sheet and the conduct of monetary policy.
Touching on the banking sector, he said Ghana’s financial system remains stable and well-capitalised, with improvements recorded in asset quality over the past year.
However, he noted that credit growth remains relatively slow, prompting the committee to examine whether the trend reflects tighter lending conditions by banks or weak borrowing demand within the economy.
Dr Asiama said policymakers must remain cautious despite the recent improvements in Ghana’s economic indicators.
“The question before the committee is not whether conditions have improved. They have indeed improved significantly across the board,” he said.
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