The Bank of Ghana has reiterated its commitment to the medium-term inflation target of 8 percent, with a tolerance band of plus or minus 2 percentage points, barring any significant shocks to the economy .
According to its July 2026 Monetary Policy Report (MPR), the central bank acknowledged that upward revisions in utility tariffs, re-escalation of geopolitical tensions in the Middle East, and the potential impacts of heavy rains on the food supply chain present upside risks to the inflation outlook .
However, the Bank expressed confidence that the maintenance of an appropriate monetary policy stance, strong sterilisation efforts, ongoing fiscal consolidation, and adequate reserve buffers are expected to mitigate these risks over the forecast horizon .
MPC cites global uncertainties
At the 131st Monetary Policy Committee (MPC) meeting held from July 20 to 22, 2026, the Committee noted elevated risks in the global environment arising from escalating tensions in the Middle East .
The MPC further acknowledged the strengthening of domestic growth and continued improvements in the trade balance, which would help build reserve buffers and enhance the economy’s resilience to heightened global uncertainty .
In taking its monetary policy decision, the MPC noted that the renewed Middle East conflict and associated disruption of trade routes had re-ignited volatility in energy markets, with crude oil prices rising above US$85 per barrel . These developments, they highlighted, could disrupt global supply chains and dampen global growth .
In addition, disinflation trends in several countries had stalled as energy prices had risen sharply, prompting many central banks to pause their monetary policy easing cycles in response to emerging inflationary risks .
“Although global financing conditions remained relatively accommodative, the persistence of external shocks could result in tighter conditions, with adverse effects transmitted through the trade and financial channels of emerging market and developing economies,” the Bank stated .
Policy rate maintained at 14%
Following the MPC meeting, the central bank unanimously decided to maintain the Monetary Policy Rate at 14 percent, judging that the current policy stance remains appropriate to guide inflation into the medium-term target band while allowing time to assess evolving geopolitical developments and their potential impact on the domestic economy .
Governor Dr. Johnson Pandit Asiama, who announced the decision, said the committee judged that the current policy stance remains appropriate while allowing time to assess the evolving geopolitical developments .
“Potential upward adjustments in utility tariffs together with escalating geopolitical tensions in the Middle East and the associated increase in crude oil prices present upside risks to the inflation outlook. On the downside, continued fiscal consolidation and an appropriately calibrated monetary policy stance should help moderate these risks going forward,” Dr. Asiama explained .
The MPC decision came despite strong economic indicators showing continued expansion in Ghana’s economy during the first quarter of 2026, with real GDP growth reaching 6.4 percent, compared with 6.2 percent in the same period a year earlier .
Inflation trends and target considerations
The year-on-year inflation rate increased to 5.0 percent in August 2026, up from 4.6 percent recorded in July, according to the latest figures from the Ghana Statistical Service (GSS) . This marks the second consecutive monthly rise in inflation, putting some pressure on the country’s recent disinflation gains .
Despite the increase, the August inflation rate remains below the 5.5 percent recorded in August 2025 and comfortably below the Bank’s medium-term target band of 6 to 10 percent .
The latest rise was largely driven by non-food items, particularly housing, transport, utilities, education and other services, while imported inflation and food inflation remain relatively low . Non-food inflation increased to 6.8 percent in August from 6.7 percent in July and accounted for 70.9 percent of total inflation during the month .
Transport inflation stood at 10.5 percent, while housing, water and energy recorded inflation of about 10.2 percent . Services inflation also increased to 8.6 percent from 8.5 percent in July, more than twice the 3.8 percent inflation recorded for goods .
Governor rules out immediate target revision
Earlier in August, Governor Dr. Johnson Asiama ruled out any immediate reduction in the country’s inflation target, cautioning that the recent improvement in price stability may be too early to declare permanent .
Speaking at the 2026 CEOs Connect organised by the Canada Ghana Chamber of Commerce, Dr. Asiama said some investors had questioned why the Bank had not lowered its current 8 percent inflation target, suggesting a reduction to about 4 to 6 percent .
“And I said, well, Iran is still around the corner. The crisis in Iran, it may be too early for me to put that rope around my neck,” the Governor said .
Despite the caution, Dr. Asiama expressed confidence that Ghana can sustain the recent gains in price stability over the medium term, adding that the immediate priority for the Bank is to consolidate the country’s macroeconomic gains rather than adjust the inflation benchmark prematurely .
External buffers and economic resilience
The MPC noted that Ghana’s external position continued to strengthen, with the trade surplus rising to US5.8 billion in the corresponding period of 2025, while the current account surplus expanded to US$5.1 billion .
Gross international reserves stood at US$12.9 billion at the end of June, equivalent to five months of import cover, providing adequate buffers for the economy to withstand external shocks . The cedi, which came under pressure in May, has since recovered, although it recorded a cumulative depreciation of 9.5 percent against the US dollar as of July 17, 2026 .
Private sector credit growth accelerated sharply to 41.2 percent in June 2026, compared with 8.6 percent in June 2025, while average lending rates fell to 15.6 percent from 27 percent a year earlier, supporting economic activity .
The Bank of Ghana’s next MPC meeting is scheduled for September 22 to 24, 2026, with the policy decision expected on September 24 .
