- Governor Dr Asiama Says Monetary Policy Must Close Gap Between Policy Intent and Economic Impact
The Bank of Ghana is accelerating the modernisation of its monetary policy framework through a combination of voting reforms, stronger communication, short-term liquidity operations, a new foreign-exchange framework and greater use of high-frequency data to improve the speed and credibility of policy transmission.
Governor Dr Johnson Pandit Asiama said the objective is to reduce the gap between the policy the central bank intends, the signal understood by financial markets and the eventual effect felt across the real economy. He made the remarks at a High-Level Forum on the Modernisation of Monetary Policy Formulation and Implementation in Accra on August 17, 2026.
Dr Asiama said monetary policy decisions have direct consequences for borrowing costs, household purchasing power, investment, employment and the ability of businesses and farmers to finance economic activity. Yet central banks must often make those decisions with incomplete information and amid uncertainty over how inflation, growth and financial conditions will evolve.
That challenge has become more difficult as policymakers confront overlapping geopolitical shocks, commodity-price volatility, technological change and increasingly complex financial systems.
“For me, that is what monetary policy modernisation is fundamentally about,” he said, arguing that the task extends beyond better models and instruments to improving the connection between policy intent, market expectations and actual economic outcomes.
One of the most significant institutional changes has been the overhaul of the Monetary Policy Committee’s decision-making process. Since March 2025, the Bank has moved away from a consensus-building model towards majority voting, while individual MPC members now publish statements explaining the evidence and reasoning behind their preferred policy positions.
The reform is designed to make disagreement within the committee more transparent rather than treating unanimity as a prerequisite for credibility. Dr Asiama argued that credible monetary policy does not require every policymaker to reach the same conclusion, but does require individual judgments to be grounded in evidence and the institution’s final decision to be clearly communicated and accountable.
The Bank has also strengthened communication around MPC meetings, treating public communication as part of the transmission mechanism rather than an exercise undertaken after the policy decision.
Regional post-MPC media engagements have been introduced to improve journalists’ understanding of monetary policy and reduce misinformation around central-bank decisions.
Operationally, the central bank has returned the 14-day Bank of Ghana bill to the centre of its open-market operations. The instrument is now being used as the main vehicle for liquidity management at the very short end of the market, which the Bank expects to improve market functioning and strengthen the transmission of monetary-policy signals.
That change is particularly relevant as the Bank attempts to ensure that movements in its policy stance are reflected more consistently in short-term market rates and ultimately in broader financing conditions.
Effective inflation targeting depends not only on adjusting the policy rate but also on ensuring that liquidity conditions in the banking system reinforce rather than dilute the intended signal.
The Bank has simultaneously introduced a new Foreign Exchange Operations Framework intended to make intervention in the currency market more transparent and rules-based.
According to the Governor, the framework clarifies the objectives of foreign-exchange operations, supports reserve accumulation and seeks to limit excessive volatility while maintaining a flexible, market-determined exchange rate.
Technology is also becoming more central to inflation management. The Bank has developed an e-inflation measure calculated almost in real time, allowing policymakers to assess emerging price developments more quickly and strengthen nowcasting and near-term inflation forecasts rather than relying exclusively on data describing economic conditions several weeks or months earlier.
That shift addresses one of the fundamental weaknesses confronting monetary policymakers: official data is often backward-looking while policy itself must anticipate future inflation. High-frequency information can therefore give the MPC an earlier indication of price pressures, although the ultimate challenge will be ensuring that faster data improves judgment rather than simply generating more short-term noise.
The modernisation agenda has also extended to the Bank’s legal and institutional foundations. Amendments to the Bank of Ghana Act have strengthened central-bank independence, formalised aspects of the MPC’s mandate and decision-making process and reinforced restrictions on monetary financing of the government budget.
Forecasting capacity has also been upgraded through improvements to the Bank’s Forecasting and Policy Analysis System and Quarterly Projection Model. The QPM now incorporates more sector-specific dynamics and is being used to construct baseline projections, test alternative scenarios and assess risks around the inflation and growth outlook.
Dr Asiama said the reforms had coincided with a sharp decline in inflation, which subsequently fell below the central bank’s medium-term target. He nevertheless presented Ghana’s approach as one experience from which other central banks could draw lessons rather than a model that should simply be replicated elsewhere.
The broader challenge is that the financial system through which monetary policy operates is itself changing rapidly. Faster digital payments and the emergence of new forms of private money, including stablecoins, are raising fresh questions around financial stability, monetary sovereignty and the effectiveness of traditional monetary-policy transmission channels.
For Ghana, the test of the reforms will therefore be less about the number of new instruments introduced and more about whether they make monetary policy more predictable, better understood and more effective in influencing inflation and financing conditions.
The Bank’s modernisation programme suggests a deliberate move towards a framework in which decision-making, communication, liquidity management, foreign-exchange operations and forecasting operate as mutually reinforcing parts of the same policy architecture.
