BoG Keeps Policy Rate Unchanged, here is why
The Bank of Ghana has maintained its policy rate at 14.0 per cent, signalling a cautious pause in its easing cycle as renewed pressure on the cedi and rising global crude oil prices cloud the near-term inflation outlook.
The decision by the Monetary Policy Committee comes despite a sharp decline in inflation over the past year and a broad easing of domestic interest rates across the money and credit markets.
Headline inflation fell to 3.4 per cent in April 2026, from 21.2 per cent in April 2025, while food inflation declined sharply to 2.2 per cent and non-food inflation stood at 4.2 per cent. However, inflation edged up from 3.2 per cent in March, marking the first increase after a prolonged disinflation cycle.
The hold suggests the central bank is placing greater weight on forward-looking risks than on the current inflation print, particularly as external shocks begin to test Ghana’s price stability gains.
Governor Dr Johnson Pandit Asiama addressing the press said the Committee’s took into consideration “heightened policy complexity”, with improved domestic conditions but a deteriorating external environment driven by the Middle East conflict and its impact on global energy and commodity prices.
He warned that for Ghana, a commodity-exporting but energy-importing economy, the transmission channels from the external shock were “multiple and material”, including fuel prices, transportation costs, import bills and consumer price dynamics.
The Bank’s caution is reinforced by the sharp rise in crude oil prices. Brent crude averaged $103.2 per barrel in April 2026, representing a 67.4 per cent year-to-date increase, raising concerns over possible pass-through to domestic fuel prices, transport fares and inflation expectations.
The cedi has also come under renewed pressure. The local currency traded at GH¢11.4125 to the dollar as at May 15, 2026, representing a year-to-date depreciation of 8.4 per cent. It also depreciated by 7.5 per cent against both the pound and the euro.
A further rate cut in such an environment could have risked weakening the attractiveness of cedi-denominated assets, especially at a time when global yields remain elevated and frontier market currencies are exposed to external financing pressures.
The MPC’s decision therefore reflects a balancing act: domestic data show room for lower interest rates, but external risks argue for restraint.
The policy rate has already been reduced significantly over the past year, falling from 28.0 per cent in April 2025 to 14.0 per cent in April 2026. The interbank weighted average rate dropped from 26.92 per cent to 10.36 per cent, while the 91-day Treasury bill rate fell from 15.47 per cent to 4.90 per cent over the same period.
The average lending rate has also declined to 16.33 per cent, from 27.40 per cent a year earlier, suggesting that the Bank’s earlier easing has begun to transmit into credit pricing.
Private-sector credit is also recovering. Nominal private-sector credit grew by 28.7 per cent year-on-year in April 2026, while real private-sector credit expanded by 24.5 per cent, pointing to improved credit conditions as inflation and interest rates eased.
The banking sector remains broadly resilient, with the capital adequacy ratio rising to 22.3 per cent in April 2026, while the non-performing loan ratio eased to 18.0 per cent, from 23.6 per cent a year earlier.
These indicators provide support for continued monetary easing over the medium term. But the MPC appears to have judged that the present moment requires a pause to assess whether inflation expectations remain anchored amid rising global uncertainty.
Dr Asiama had warned ahead of the decision that the Committee would have to consider how to realign the interest-rate structure while ensuring inflation expectations do not become “dislodged”, especially as domestic energy supply disruptions and external commodity price pressures create what he described as a possible “dual-channel inflation expectations problem.”
The decision also comes as Ghana prepares to transition from its IMF Extended Credit Facility programme into a non-financing Policy Coordination Instrument, which the Governor said would maintain commitments around the inflation-targeting regime, monetary policy transmission, liquidity forecasting and exchange-rate policy framework.
The decision is unlikely to mark the end of the easing cycle. Rather, it points to a temporary pause as the central bank waits for clearer evidence on the direction of inflation, exchange-rate stability and energy-price pass-through.
