The Governor of the Bank of Ghana (BoG), Dr. Johnson Asiama, has provided strong assurances about the cedi’s long-term stability, emphasizing that its favorable performance is sustainable. Speaking at the opening session of the Monetary Policy Committee (MPC) meeting in Accra on May 21, 2025, Dr. Asiama attributed the promising outlook to effective monetary policies aimed at curbing inflation and bolstering the currency’s resilience.
Sustaining Confidence in the Cedi
Dr. Asiama urged both investors and citizens to remain confident, stating that recent gains in the cedi’s value reflect deliberate policy measures. “There is no need for panic,” he remarked. “The central bank remains steadfast in its commitment to maintaining stability through prudent economic management.”
Factors Driving Cedi Stability
Addressing the committee, the governor highlighted key drivers behind the cedi’s stability:
1. Prudent Monetary Policies: Strategic adjustments have curtailed inflationary pressures and stabilized the financial market.
2. Improved Market Sentiment: Positive investor confidence has bolstered economic activity.
3. External Sector Gains: Enhanced export earnings and reduced import dependency have supported the cedi’s appreciation.
He also noted progress under the IMF’s Extended Credit Facility (ECF) Programme, pointing to a recent Staff-Level Agreement on the Fourth Review and an upgraded sovereign credit rating from S&P Global, moving Ghana from “Selective Default” to “CCC+.”
“This upgrade affirms Ghana’s improving economic fundamentals,” Dr. Asiama observed. He further cited rising consumer and business confidence as indicators of a robust recovery, supported by strengthened external reserves and a positive trade balance.
Challenges and Mitigation Strategies
Despite the progress, Dr. Asiama acknowledged lingering vulnerabilities, particularly in inflation management and global economic dynamics.
Inflation Risks: Supply chain constraints and potential second-round inflationary effects remain significant concerns.
Geopolitical Tensions: Ongoing global trade disputes, including US-led tariff conflicts, could influence commodity prices and financial flows in emerging markets.
To address these challenges, the BoG has initiated a comprehensive review of its monetary policy framework. Dr. Asiama announced a shift towards active Open Market Operations (OMO) using longer-tenor instruments. “This transition will enhance policy transmission, improve liquidity management, and expand credit access for the private sector,” he explained.
Outlook and Focus Areas
Dr. Asiama called on the MPC to carefully evaluate the sustainability of recent gains and the adequacy of the current policy stance. Key questions for consideration include:
Is the exchange rate appreciation sustainable over the medium term?
How durable is the renewed market confidence?
What are the implications of these dynamics for inflation forecasts?
He emphasized that achieving a balance between disinflation efforts and sustaining economic growth remains critical.
Conclusion
Dr. Asiama concluded on an optimistic note, reaffirming the central bank’s dedication to fostering economic stability. “Our commitment to sound monetary policies and proactive interventions will ensure the cedi’s resilience amidst evolving global and domestic challenges.”
The MPC meeting continues, with stakeholders closely monitoring the bank’s next steps to solidify Ghana’s economic gains.
Story by: Mercy Addai Turkson #ahotoronline.com
