Dr. Johnson Asiama, the Governor of the Bank of Ghana (BoG), has offered insights into why Ghanaians are yet to experience noticeable price reductions in the market, despite the recent appreciation of the Cedi against major currencies.
Speaking at the 124th Monetary Policy Committee (MPC) press conference held in Accra on May 24, Dr. Asiama attributed the lag in price adjustments to the dynamics of inventory and market competition.
“Many traders stocked their goods when the exchange rate was higher. Even though the Cedi has appreciated, it naturally takes some time for these price adjustments to reflect,” Dr. Asiama explained. He assured the public that as market competition intensifies and older stock clears, the prices of goods and services will gradually align with the improved exchange rate.
Sustained Appreciation and Policy Context
Responding to questions about the sustainability of the Cedi’s appreciation, Dr. Asiama provided reassurance. He emphasized that appreciation is market-driven rather than reliant on central bank interventions.
“The Cedi’s appreciation must be understood in the proper context. While stability in nominal terms is desirable, we must ensure that in real terms, the Cedi does not appreciate persistently, which could harm our competitiveness,” he noted.
Dr. Asiama highlighted the robust economic policies and international flows underpinning the currency’s performance. “This trend is largely supported by our monetary policy stance, fiscal consolidation, and improved market sentiment. Notably, the central bank is not depleting its reserves to stabilize the currency. Instead, our reserve programme has strengthened, with Gross International Reserves reaching $10.7 billion in April 2025, equivalent to 4.7 months of imports.”
Economic Performance and Policy Decisions
The MPC maintained the policy rate at 28%, citing a need to reinforce disinflation efforts despite declining inflationary pressures. Dr. Asiama reported that headline inflation has consistently declined over the first four months of 2025, driven by reductions in both food and non-food inflation.
On the external front, Ghana achieved a record provisional current account surplus of $2.1 billion in Q1 2025, supported by higher gold and cocoa prices, increased production volumes, and strong remittance inflows. This performance, coupled with disciplined fiscal measures, contributed to a balance of payments surplus of $1.1 billion.
Dr. Asiama also highlighted the Cedi’s significant gains against major currencies in 2025: 24.1% against the US Dollar, 16.2% against the British Pound, and 14.1% against the Euro
Inflation Outlook
The BoG projects a faster decline in inflation, potentially reaching the medium-term target by Q1 2026, earlier than previously anticipated. This optimistic forecast hinges on sustained monetary discipline, exchange rate stability, and fiscal consolidation. However, Dr. Asiama acknowledged that inflation levels remain high relative to the medium-term target, necessitating the current tight monetary stance.
“The Committee remains resolute in maintaining this stance to solidify the disinflation process,” he concluded.
Ghanaians can anticipate more stable prices in the months ahead as the combined effects of strong policy measures and market dynamics work to improve the economic landscape.
Story by: Mercy Addai Turkson #ahotoronline.com
