Dr. Johnson Asiama, the governor of the Bank of Ghana (BoG), has promised the public and Ghanaians that, as long as there is competition, pricing for goods and services will soon change.
This comes after the Cedi’s value increased in relation to the US dollar. At the 124th Monetary Policy Committee (MPC) press conference in Accra on Friday, May 24, Dr. Asiama responded to a question about when Ghanaians should anticipate price predictions on the market after the local currency stabilizes by saying, “You can understand that some people stock their goods at a higher exchange rate, and so naturally, even with the appreciation, it takes a while for you to see that adjustment.”
As long as there is competition and it is not a monopoly, you can be sure that you will see the adjustment, and that type of occurrence will appear pretty soon.
He responded, “The Cedi appreciation has to be put into proper context,” when asked again if the appreciation is sustainable. As much as you may want Cedi stability in a theoretical sense, what matters most is that the Cedi isn’t steadily increasing in value in real terms. Following extensive discussions and an examination of the actual movement of the currency rate, the MPC concluded that, at this point in time, there is no significant appreciation issue that would negatively affect our ability to compete.
Therefore, we believe the trend is in line for the time being; however, we are keeping a close eye on it. However, the markets are primarily responsible for the appreciation; the central bank is not utilizing its reserves to support it. Our reserve program is expanding, as you can see from the data pack we released. Since we are not utilizing our reserves to intervene in the market, the appreciation you are witnessing is driven by international flows and the monetary policy’s economic stance. Therefore, while there is appreciating, our goal is to keep the exchange rate stable.
Dr. Asiama had stated at the press conference that the MPC had kept the Policy Rate at 28% prior to his responses.
Among other things, Dr. Asiama said that both food and non-food inflation were responsible for the successive declines in headline inflation over the first four months of the year.
With a record provisional current account surplus of US$2.1 billion in the first quarter of 2025, the external sector has continued to improve. This was mostly due to robust remittance inflows, higher prices, and greater production quantities of cocoa and gold. Together with net inflows in the capital and finance accounts, the current account surplus produced a US$1.1 billion balance of payments surplus. Significant reserve accumulation was the outcome of the excellent external performance. In April 2025, gross international reserves (GIR) totaled US$10.7 billion, which is the same as 4.7 months’ worth of imports. Overall, the outlook for the external sector is still positive and is mostly based on projections of higher export revenues from cocoa and gold as well as remittance inflows.
A number of reasons, including a restrictive monetary policy stance, continuous fiscal austerity, record reserve building, stringent enforcement of foreign exchange market regulations, and improved market sentiment, have contributed to the cedi’s robust recovery against the main trading currencies. The cedi gained value in relation to all of the major currencies in the year ending May 21, 2025: it gained 24.1 percent versus the US dollar, 16.2 percent against the British pound, and 14.1 percent against the euro.
The most recent prediction indicates that inflationary pressures will continue to decline as a result of fiscal austerity, exchange rate stability, and a strict monetary policy stance. Barring unforeseen shocks, inflation is predicted to drop toward the medium-term objective more quickly in the first quarter of 2026 than in the second quarter as previously planned. Notwithstanding these encouraging trends, the Committee noted that the current rate of inflation is still excessive in comparison to the medium-term target and that the strict stance will be necessary to support the disinflation process. In light of the situation, the Committee unanimously decided to keep the policy rate at 28%,” he stated.
