Dr Asiama Says Inflation Rebound, Oil Volatility to Dominate 131st MPC Talks
The Bank of Ghana’s Monetary Policy Committee has opened its 131st meeting with inflation, liquidity conditions, oil-price volatility and the changing structure of domestic credit expected to dominate deliberations, as policymakers assess whether Ghana’s recent price rebound marks normalisation or the start of a more persistent inflation cycle.
Opening the meeting at the Bank Square in Accra on Monday, July 20, 2026, Governor Dr Johnson Pandit Asiama said the Committee would review the impact of decisions taken at its previous sitting, including the retention of the policy rate at 14.00% and the replacement of the dynamic Cash Reserve Ratio framework with a uniform 20.00% domestic currency requirement.
The Governor said the Committee had judged at its 130th meeting that strengthening the operational framework was more appropriate than adjusting the policy rate, given the external uncertainty at the time. He added that the Bank’s decision, effective July 1, to cease prefinancing Ghana Gold Board purchases through auction arrangements had changed the sources of domestic liquidity and would form part of this week’s assessment.
The remarks suggest that the Bank is entering this week’s policy discussions with caution rather than complacency. Ghana’s inflation has fallen sharply from the levels recorded a year earlier, but the recent direction of travel has changed.
According to Dr Asiama, headline inflation has risen for three consecutive months, moving from 3.20% in March to 5.30% in June, driven largely by transport and haulage prices. Although the latest rate remains below the lower bound of the Bank’s 8.00% target, plus or minus 2.00 percentage points, and far below the 13.70% recorded a year earlier, the Governor said the prolonged disinflation phase had ended.
That sentence is likely to frame the policy debate. The question before the MPC is no longer whether inflation has eased. It has. The question is whether the recent rise is merely a return towards the target band after an unusually low inflation phase, or whether new pressures from fuel, transport, utilities and expectations are beginning to build.
Dr Asiama said the Committee must determine whether the increase reflects a temporary response to higher imported energy costs or signals a more durable shift in the inflation outlook. He said that assessment would have to consider the interaction between external commodity-price pressures and possible adjustments to utility tariffs and transport fares.
That distinction matters for policy. If the inflation rebound is temporary, the Bank may prefer to hold its stance and monitor incoming data. If it begins to influence expectations and price-setting behaviour, the MPC may be forced to lean more firmly against renewed inflationary pressure.
The external environment has also become more complicated. The Governor said global developments had broadly evolved in line with earlier expectations, but downside risks had become more pronounced. A mid-June ceasefire briefly eased tensions and allowed oil prices to retreat, but renewed hostilities around the Strait of Hormuz had reignited energy-market volatility, with Brent crude rebounding above US$85.00 per barrel earlier in the week.
For Ghana, the risk is clear. As a commodity-exporting but energy-importing economy, rising oil prices can support some external earnings through commodity channels, but they also raise import costs, transport prices, utility pressures and inflation risks. Dr Asiama said these developments required careful assessment of how external cost pressures may affect the domestic inflation outlook over the policy horizon.
Domestic activity, however, remains resilient. The Governor said the economy expanded by 6.40% in the first quarter, compared with 6.20% a year earlier, while the GDP deflator eased to 4.10%. Real private-sector credit accelerated to 34.10%, compared with a 4.50% contraction a year earlier, reflecting the easing in domestic credit conditions that accompanied the disinflation process.
That rapid growth in real private-sector credit will likely draw close scrutiny. On one hand, it suggests improving financial conditions and stronger support for business activity. On the other, if credit expansion becomes too rapid or poorly distributed, it could feed demand pressures or worsen future credit risk.
Dr Asiama said the Committee would need to assess whether the pace of private credit growth is broad-based and sustainable. He also noted that while the banking system remains sound and well-capitalised, the still-elevated non-performing loan ratio shows that credit risk has not yet been fully worked through the system.
The exchange rate has remained broadly stable through the first half of July, offering some support to the disinflation story. But the Governor’s remarks make clear that external volatility, oil-market risks and liquidity dynamics remain central to the policy calculation.
Four issues will guide the Committee’s discussions: the inflation outlook, the effectiveness of the May reforms, the changing composition of domestic liquidity, and the external environment.
On the May reforms, staff will assess whether short-term market rates have become better aligned with the policy rate after the revised CRR framework was introduced to address persistent stickiness in the interbank rate at the lower bound of the policy corridor.
On liquidity, the cessation of Bank prefinancing for GoldBod purchases removes one source of liquidity injection at a time when private-sector credit is expanding rapidly. The MPC will assess what this means for the calibration of the current policy stance and whether the balance between sterilisation and structural measures remains appropriate.
The Governor also linked this week’s discussions to Ghana’s continuing engagement with the IMF on the proposed Policy Coordination Instrument, saying the process reinforces the Bank’s institutional priorities: credible inflation targeting, effective transmission and disciplined liquidity management.
The 131st meeting also marks the launch of the Monetary Policy Committee Educational Observership Programme, with selected students from the University of Ghana participating in aspects of the week’s proceedings. Dr Asiama said the initiative forms part of the Bank’s effort to strengthen transparency, policy credibility and links between academia and policy institutions.
For markets, the policy signal is finely balanced. Inflation remains below target, growth is resilient, the exchange rate is stable and the banking system is sound. But inflation has turned upward, oil prices are volatile, transport costs are feeding price pressures and credit growth has accelerated sharply.
The MPC’s task, therefore, is not simply to reward past disinflation with looser policy. It must determine whether the framework strengthened in May remains fit for current conditions and whether the choices made then continue to serve the Bank’s medium-term credibility.
This week’s decision will be watched closely because it comes at a turning point. Ghana is no longer in the intense disinflation phase that gave policymakers room to breathe. It is entering a more delicate period in which inflation is still low, but risks are beginning to move in the opposite direction.
For the Bank of Ghana, the challenge is to preserve credibility without choking recovery. For businesses and households, the outcome will signal whether the central bank believes Ghana’s recent inflation uptick is temporary noise or the first warning that price pressures are returning.
