The Bank of Ghana (BoG) expects the recent increase in inflation to be temporary as economic activity strengthens, Governor Dr Johnson Pandit Asiama has said, although rising global oil prices and other external risks could threaten the country’s improving outlook.
Speaking to business stakeholders in Sunyani, Dr Asiama said inflation rose to 5.3 per cent in June from 3.7 per cent in May, largely due to higher transport costs triggered by increases in global crude oil prices.
“We believe this is temporary, and we will continue to monitor developments closely to ensure that inflation remains under control,” he said.
The Governor said the central bank remained committed to maintaining price stability while creating conditions that support sustainable economic growth.
The Bank of Ghana’s Monetary Policy Committee last month maintained the policy rate at 14 per cent, seeking to strike a balance between keeping inflation under control and supporting economic activity.
Economy Expands 6.4%
Dr Asiama said Ghana’s economy continued to demonstrate resilience, expanding by 6.4 per cent in the first quarter compared with 6.2 per cent during the corresponding period last year.
Growth was driven mainly by the services and industrial sectors, with economic activity strengthening across bank lending, trade, industrial production and tourism.
He said improving business and consumer confidence was also providing further momentum to economic activity.
Private-Sector Credit Surges
The Governor pointed to the sharp expansion in private-sector credit as another indication of improving financial conditions.
Credit to businesses and households increased by more than 41 per cent in June, compared with about 9 per cent a year earlier.
Dr Asiama said declining lending rates were making financing more accessible to businesses, providing greater opportunities for investment and expansion.
He also described Ghana’s banking sector as “strong and stable”, saying banks remained well-capitalised, deposits were growing and the quality of loans continued to improve.
Reserves Hit US$12.9 Billion
Ghana’s external position has also strengthened, supported by robust gold and cocoa exports, which helped generate a higher trade surplus during the first half of the year.
However, Dr Asiama cautioned that rising global oil prices were increasing the country’s import bill and remained a potential risk to the economic outlook.
Ghana’s foreign exchange reserves stood at approximately US$12.9 billion, equivalent to about five months of import cover, providing the economy with a stronger buffer against external shocks and supporting stability in the foreign exchange market.
The cedi came under pressure earlier in the year amid global developments, including conflict in the Middle East, but has since recovered.
“We remain committed to maintaining an orderly and well-functioning foreign exchange market,” Dr Asiama said.
BoG Warns Against Complacency
Despite the improving indicators, the Governor cautioned against complacency, stressing that global economic developments could still pose risks to Ghana’s recovery.
He said the central bank would remain focused on protecting the value of the cedi, maintaining low inflation, safeguarding financial stability and supporting sustainable economic growth.
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Dr Asiama also stressed that sustaining Ghana’s improving macroeconomic environment would require collective responsibility beyond the central bank.
“Macroeconomic stability is not the responsibility of the Bank of Ghana alone – it is a partnership between policymakers, businesses, financial institutions, traders, farmers, and households,” he said.
Ghana is seeking to consolidate its recent macroeconomic gains following years of elevated inflation, currency volatility and debt pressures.
