Bank of Ghana Governor Dr Johnson Asiama has revealed that the Monetary Policy Committee (MPC) places inflation outlook at the centre of its policy rate decisions, as lingering geopolitical tensions in the Middle East continue to complicate the central bank’s efforts to balance price stability with economic growth.
Speaking during the inaugural MPC Educational Observership Programme, which brought economics and business students from the University of Ghana into the central bank’s policymaking process, Dr Asiama said the committee’s decisions are guided by its assessment of where inflation is heading and the risks that could affect the outlook.
“This is why our decisions are always guided by the inflation outlook for the economy,” he said.
Middle East crisis forces policy pause
Dr Asiama disclosed that developments in the Middle East had directly influenced the committee’s recent decision to hold the policy rate steady at 14 percent for the second consecutive meeting. The MPC had previously cut the rate by a cumulative 1,400 basis points since July 2025, including a 150-basis-point reduction to 14 percent in March 2026.
“Like some two months ago, I thought that we would go ahead with the easing cycle. However, fresh developments in the Middle East could affect end-year inflation, hence the need to hold the policy rate to try and check inflation rising further in the coming months,” he explained.
The Governor has previously described the Middle East conflict as the “elephant in the room” influencing the central bank’s cautious stance. The International Monetary Fund has revised its 2026 global growth forecast downward from 3.3% to 3.1%, citing the adverse effects of the conflict on global demand and supply chains. For Ghana, which exports commodities but imports energy, the external shock has affected fuel prices, transportation costs, import bills and inflation.
From consensus to majority voting
Dr Asiama also disclosed a significant shift in the MPC’s decision-making process, revealing that the committee now relies on majority decisions rather than consensus.
He explained that a consensus-based approach could limit members from fully expressing their individual positions. “If you go for a consensus, more or less you are constraining everyone to fall in line,” the Governor said.
Dr Asiama stressed the independence of MPC members, saying they are expected to argue their positions without being influenced by the Governor. Recent MPC meetings have involved robust debate, with members challenging one another before decisions are settled by majority vote. All six members of the MPC voted to keep the policy rate at 14 percent in the committee’s most recent meeting.
Inflation expectations and research guide policy
The Governor further identified inflation expectations as an important consideration in determining the policy rate. “We also have a team that goes out to do the necessary research, and all these things guide our policy rate decisions,” he added.
The Bank monitors what households and businesses believe will happen to prices through surveys and market signals, since these perceptions influence real economic behaviour. Ghana’s headline inflation fell to 4.6 percent in July 2026 from 5.3 percent in June, marking the first slowdown in inflation since March. However, the Bank remains cautious about the outlook amid external risks.
Demystifying monetary policy for students
The Governor made the remarks during the maiden MPC Educational Observership Programme, an initiative launched during the Bank’s 131st MPC meetings as part of its broader commitment to promoting transparency and strengthening policy credibility.
“Monetary policy is most effective when it is understood, trusted and supported by the public,” Dr Asiama said at the launch. “Through this initiative, we seek to demystify the monetary policy process by providing students with practical exposure to the analytical work, technical discussions and communication processes that underpin the Committee’s decisions.”
Students from the University of Ghana’s Department of Economics and Business School were the first beneficiaries. They observed technical presentations on inflation trends, macroeconomic developments, the external sector, financial markets and a broad range of data considered before a policy decision is reached.
The programme also seeks to strengthen collaboration between academia and public policy institutions while nurturing the next generation of economists and policymakers. One student said the experience had dispelled the misconception that the Governor alone determines the Monetary Policy Rate: “Watching the presentations and discussions has shown us that the decision is based on rigorous analysis and contributions from many experts, not just one individual.”
Balancing act ahead
The Governor has reiterated that the Bank of Ghana remains committed to pursuing policies that safeguard macroeconomic stability while supporting sustainable economic growth. The central bank will continue to monitor both domestic and international economic developments and take appropriate measures to maintain a stable environment for businesses, investors and households.
However, with the Middle East crisis showing no signs of abating and its economic consequences now visible in global data, the MPC faces a delicate balancing act between containing inflation and supporting growth. As Dr Asiama noted, “If we assume that it will be longer-lasting, then you can imagine the impact on inflation expectations and the so-called second-round effects.” (Reporting by Abubakar Ibrahim; Additional reporting by the Accra newsroom)
