At its 128th Monetary Policy Committee (MPC) meeting from January 26 to 28, 2026, the Bank of Ghana’s MPC voted by majority to slash the Monetary Policy Rate (MPR) by 250 basis points to 15.5 percent.
The central bank has now published the committee’s full reasoning, highlighting global and domestic improvements that justify the easing.
One MPC member explained: “Global economic activity remained solid in 2025 and is projected to grow by 3.3 per cent in 2026. Inflation has eased across major economies, prompting most central banks to loosen monetary policy. Improved global financial conditions supported by a softer US dollar and lower global yields provide a favourable backdrop, although geopolitical tensions, disorderly tariff adjustments, and oil price volatility continue to pose risks. Domestically, macroeconomic conditions have strengthened further. Inflation declined for the twelfth consecutive month to 5.4 per cent in December 2025, driven by stable exchange rate conditions, improved supply dynamics, and earlier policy measures. Inflation expectations among consumers, firms, and financial market participants as well as economic experts have also fallen, reinforcing the disinflation trend.
“The external sector remains robust, underpinned by a sizable current account surplus, strong foreign reserves, culminating in the robust performance of the currency. Real sector indicators—including GDP trends, Compositive Index of Economic Activity (CIEA), Purchasing Managers’ Index (PMI), and sentiment measures point to continued economic expansion. Monetary and financial conditions are gradually normalising, with improving liquidity and early signs of recovery in private sector credit.
“Risks to the inflation outlook are broadly balanced. Potential upward pressures from utility tariff adjustments, agricultural supply disruptions, and global commodity price movements are offset by downward risks from a strong currency, expected reductions in transport fares, and lower VAT and fuel prices. Near term forecasts indicate inflation will remain within or below the lower bound of the target band. Given the sustained disinflation, anchored expectations, and strengthened external fundamentals, maintaining the previous degree of monetary tightness could unduly constrain economic activity and delay credit recovery. Current conditions provide room for a measured easing of the policy stance. The economy is now at a stage where disinflation is well established, expectations are firmly anchored, and external conditions are favourable. A cautious adjustment in the policy rate will help align real rates with current inflation dynamics, support confidence, stimulate credit growth, and reinforce the ongoing economic recovery, while keeping inflation within the medium term target range. I therefore vote to reduce the policy rate by 250 basis points to 15.5 percent while reaffirming the Committee’s commitment to act swiftly if inflation risks emerge.”
This move signals confidence in Ghana’s economic rebound amid controlled inflation.
Story by: Mercy Addai Turkson #ahotoronline.com