Editorial: MPC cuts policy rate by 150 basis points….

The 129th Monetary Policy Committee (MPC) meeting held from March 16–18 cut its benchmark interest rate by 150 basis points to 14 percent from 15.5 percent.

The MPC cited sustained disinflation, improving domestic macroeconomic conditions and elevated real interest rates for their decision.

This notwithstanding, the central bank warns that rising oil prices and geopolitical tensions could pose risks to the inflation outlook.

Inflation dynamics were central to the decision. Headline inflation declined to 3.3 percent in February 2026 from 5.4 percent in December 2025, driven by easing food and non-food prices. Core inflation also moderated, pointing to subdued underlying price pressures.

The committee noted that inflation expectations across consumers, businesses and the financial sector remain broadly anchored.

“The favourable domestic macroeconomic conditions – and also the high prevailing real interest rates – provide scope to ease the policy rate further,” BoG Governor Dr. Johnson Pandit Asiama said at the MPC press briefing.

Externally, the country’s position remains supportive. Trade surplus widened to US$3.7billion in the first two months of 2026 from US$2.1 billion a year earlier, driven by higher gold export earnings and modest import growth. Gross international reserves rose to US$14.8billion, equivalent to 5.8 months of import cover and up from US$13.8billion at end-2025.

The central bank expects further reserve accumulation under the Ghana Accelerated National Reserve Accumulation Programme, which targets import cover of 15 months by 2028. The stronger external position has contributed to relative currency stability.

However, policymakers highlighted growing external risks. Escalating geopolitical tensions in the Middle East have disrupted supply chains, increased crude oil price volatility and heightened global uncertainty.

These developments could tighten global financing conditions and reintroduce inflationary pressures.

The MPC said its latest forecasts indicate inflation will remain within the medium-term target, but identified upside risks from potential pass-through effects of higher crude oil prices.

Governor Asiama added that the committee will continue to closely monitor developments – especially in the Middle East – and their potential implications on the inflation outlook, adding the committee stands ready to take appropriate policy action as needed to safeguard price stability.

The next MPC meeting is scheduled for May 18–20, 2026.

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