Proposed Utility Price Increases Seen by BoG as Key Risk to Further Easing
The Bank of Ghana has cautioned that the steep proposed increases in electricity and water tariffs could complicate its monetary policy stance, even as inflation continues to fall faster than expected.
Utility companies have requested hikes of more than 200 per cent, a move that risks fuelling renewed price pressures just as consumer inflation eased to 11.5 per cent in August, below the government’s year-end target of 11.9 per cent.
Opening the 126th meeting of the Monetary Policy Committee on Monday, September 15, 2025, Governor Johnson Asiama highlighted both the progress made in restoring stability and the risks that lie ahead.
“On the fiscal side, execution in the first half of 2025 signalled consolidation as the deficit on a commitment basis was contained at 0.7 per cent of GDP, below target, contributing, together with cedi strength and external restructuring, to a decline in the public debt ratio by mid-year,” he said.
The central bank cut its benchmark rate by 300 basis points to 25 per cent in July, encouraged by anchored expectations, easing inflation and stronger external buffers. Market participants had been anticipating another reduction this week, though the prospect of sharp utility tariff increases has tempered expectations.
“As the disinflation process evolves, and risks such as global trade disruptions or prospective utility tariff adjustments are assessed, our commitment remains firm, and that is to maintain price stability, safeguard financial stability, and create the conditions for inclusive and sustainable growth,” Dr Asiama said.
The MPC will announce its decision on Wednesday, September 17, 2025, with investors closely watching whether the central bank will opt to pause its easing cycle in the face of renewed inflationary risks.
