Editorial: Surging global crude prices may influence MPC’s policy deliberations

The Bank of Ghana Monetary Policy Committee (MPC) meets next week from March 16 to March 18 and among policy deliberations to consider will be the gradually easing monetary policy after a prolonged disinflation period.

Indeed, the country’s steady decline in inflation faces its first external test for more than a year, as surging global crude prices threaten to reverse one of the key forces that has helped ease consumer price pressures.

International oil prices have risen sharply in recent days, now more than 50 percent higher than levels observed during the last domestic fuel pricing window on the back of geopolitical developments, particularly in the Gulf region.

In fact, this surge has raised concerns that transport costs – which have been a key source of disinflation in recent month – could soon begin to climb again, complicating monetary policy outlook just as the central bank prepares to meet and consider another interest-rate decision.

Higher global oil prices could reverse that trend, feeding through into transport fares and eventually the broader consumer basket through higher distribution and logistics costs.

Although late on Monday night the price of Brent crude fell back below US$90 from a high of US$119.50 – when President Donald Trump indicated that the war might end soon – a long-term war would affect lives and households of everybody.

UK Chancellor Rachel Reeves said Britain is likely to be hit by rising inflation because of the US war with Iran. If the rise in energy prices persists, it could also influence policy deliberations when the Bank of Ghana Monetary Policy Committee (MPC) meets.

With recent developments, analysts contend authorities face potential fiscal trade-offs – with one possible policy response being suspension of the GH¢1 levy on fuel products in order to soften the pass-through of higher international prices to domestic pump prices.

According to Apakan Securities, the recent moderation in inflation was driven by favourable base effects that are now beginning to dissipate. However, latest inflation figures still support the case for a further policy rate cut.

The central bank reduced its policy rate by 250 basis points to 15.5 percent earlier this year after noting improved macroeconomic conditions, anchored inflation expectations and stronger external buffers.

Analysts say high oil prices tend to have a pronounced impact on inflation in African economies that rely heavily on imported, refined petroleum products. Higher oil prices typically translate into higher pump prices, which then feed into transportation costs and food distribution expenses.

This impact is often amplified by currency depreciation as larger fuel import bills increase demand for foreign exchange.

However, authorities maintain they have already developed contingency scenarios in case oil prices rise significantly further. Dr. Theophilus Acheampong, a Technical Advisor at the Ministry of Finance, says the economy is on a much better footing this time around to respond to such exogenous shocks should they be sustained.

Despite the risks posed by higher oil prices, Ghana’s external position has improved considerably over the past year.

The country recorded a trade surplus of US$13.66billion in 2025, up from US$9.88billion in 2024. Export earnings surged to US$31.11billion, largely driven by strong performances in gold and cocoa.

Gold export receipts more than doubled to US$20.98billion while cocoa exports rose to       US$3.86billion, but oil exports declined by 32.3 percent to US$2.62billion due to lower production volumes and weaker prices during the period.

Gold prices have remained elevated as investors seek safe-haven assets amid geopolitical tensions, while cocoa supply recovery in West Africa is expected to ease prices gradually.

The Bank of Ghana (BoG) says its monetary policy decisions will continue to be guided by data, even amid global commodity price fluctuations, as it works to stabilise the cedi, restore macroeconomic confidence and strengthen Ghana’s external buffers.

Governor Dr. Johnson P. Asiama made these remarks on Monday while briefing the Parliamentary Committee on Economy and Development at Parliament House on the Bank’s 2025 Monetary Policy Report.

Acknowledging external risks, the Governor said: “We remain mindful of risks in the global environment, including shifts in financial conditions and commodity price volatility. The Bank of Ghana will therefore continue to pursue a prudent, disciplined and data-driven approach to monetary policy”.

 

The post Editorial: Surging global crude prices may influence MPC’s policy deliberations appeared first on The Business & Financial Times.

Read Full Story