The Monetary Policy Committee (MPC) of the Bank of Ghana held its latest meeting on Thursday, July 17, 2025, at the Kofi Ohene Konadu Auditorium (West Wing) of the UPSA Law School in Accra. The meeting focused on key economic indicators, including inflation, exchange rate stability, fiscal consolidation, and global market pressures.
This emergency session comes at a time when inflation has eased to 13.7%, the Ghana cedi shows signs of relative stability, and the country continues efforts to consolidate its fiscal position amidst ongoing geopolitical uncertainties.
In an interview with Dr. Adu Owusu Sarkodie, a senior lecturer in Economics at the University of Ghana, he highlighted the importance of coherence between fiscal and monetary policy.
“The Monetary Policy Committee’s meeting decisions help to feed into the budget—the midyear budget—for coherence.
In the past, there was no coherence between the monetary and fiscal policies. In other words, while the Minister of Finance is saying one thing, the Governor is also saying another thing.
Since the period where there has been synergy, the policy rate is used for the policy direction in the monetary sector.”
According to him, market watchers are anticipating a reduction in the policy rate, largely due to the current inflation trend:
“People are speculating a reduction in the policy rate due to the steep curve—in other words, inflation is falling faster. Thus, when the curve is falling faster, there has to be a reduction in policy rate.”
However, Dr. Sarkodie expressed caution, citing risks to the cedi’s stability and external factors such as the Israel-Iran conflict and the Russia-Ukraine war.
“There’s a risk factor—the cedi is still fragile despite appreciating. Since the appreciation is not based on a strong economic foundation, but rather on gold and cocoa prices, when there’s a turnaround, the cedi will start depreciating.
We cannot tell yet about the geopolitical tensions in the Middle East, the Israel-Iran war, and the Russia-Ukraine war.”
He also noted a previous instance where the Bank of Ghana reduced the policy rate prematurely.
“There was a situation whereby the policy rate was reduced, and the following month, we saw inflation increasing. So I think the MPC would be careful on the quantum if there is a need for a reduction in the policy rate due to the possible risk of inflation rising again to be counterproductive.”
As the country awaits the official policy rate decision later this month, the MPC’s emergency session signals a cautious but deliberate approach to achieving economic stability.
Story by JisLord Naaa Ablorh
Edited by Sika Togoh
