The Bank of Ghana has pledged to maintain rigorous liquidity management and sterilisation measures even as it gradually eases monetary policy, signalling that price stability remains the central bank’s paramount objective despite growing business pressure for faster interest rate reductions. Governor Johnson Asiama made the commitment during the IMF and World Bank Annual Meetings held this month, assuring global markets that monetary easing will proceed cautiously without compromising inflation control.
“Currently, even though we are easing, we are still holding that anchor very strongly. A strong liquidity management, strong sterilisation. For that, we will not compromise, even as we ease downward,” the Governor stated at the international gathering.
The careful balancing act reflects Ghana’s recovery from one of the deepest economic crises in decades. When Asiama assumed office in February 2025, the banking system faced severe liquidity overhang that necessitated aggressive monetary tightening. The central bank implemented complementary sterilisation operations, reduced the Cash Reserve Ratio to absorb excess money supply, and introduced longer-dated instruments to manage money in circulation, all designed to eliminate the monetary excess that had fuelled inflation above 23 percent.
Ghana’s disinflation achievements have been substantial. Inflation has fallen to 9.4 percent, approaching the Bank of Ghana’s target band of 8 percent plus or minus 2 percent, a development enabling the central bank to begin easing the policy rate. The Monetary Policy Committee has cumulatively cut the benchmark rate by 650 basis points, reducing it to 21.5 percent from its 28 percent peak in March 2025, marking Ghana’s lowest policy rate since October 2022.
The central bank’s easing cycle reflects confidence that inflation anchoring is taking root. The IMF and World Bank have praised Ghana’s macroeconomic stabilisation efforts, with the Fund noting that Ghana is running ahead of programme targets. External sector dynamics have improved markedly, with the cedi appreciating approximately 42 percent year-on-year and international reserves accumulating beyond programme targets. Non-oil GDP growth reached 4.5 percent in the first half of 2025, exceeding initial expectations.
Yet risks persist that could necessitate tighter monetary control. Commercial lending rates remain elevated at approximately 27 percent despite disinflation progress, reflecting lingering credit risk concerns. Non-performing loan ratios within the banking sector stood at 23.6 percent, though this has begun moderating as bank solvency and profitability improve.
Globally, uncertain trade dynamics and commodity price volatility present external headwinds. The depreciation of commodities and geopolitical tensions could weaken capital inflows, potentially disrupting the stability Ghana has achieved. Additionally, domestic fiscal discipline remains essential, with government maintaining a 1.1 percent primary surplus in the first eight months of 2025, demonstrating commitment to complementary fiscal consolidation alongside monetary policy.
The Bank of Ghana’s stance reflects learning from historical episodes when excessive monetary accommodation triggered demand-driven inflation. Asiama acknowledged that his institution’s credibility was strengthened through improved monetary policy frameworks and coordination with fiscal authorities. The multi-agency approach ensured that price stability objectives aligned with fiscal consolidation, creating the complementary conditions necessary for sustainable disinflation.
“There was a lot of liquidity that had built up. And so we needed to do lots of sterilisation. We also needed the complementary efforts from the fiscal authorities. And then you also needed to look at food prices. So it was a complementary effort across all fronts that has helped to deliver the disinflation we are looking at,” the Governor explained.
The commitment to maintaining strong liquidity management carries implications for Ghana’s banking sector and private investment. While faster rate cuts would immediately reduce borrowing costs, the central bank’s measured approach prioritises sustained inflation stability over short-term growth stimulus. Business leaders and commercial banks have pressed for more rapid easing to stimulate credit demand and investment, yet the Governor’s position suggests the committee values gradual normalisation over aggressive accommodation.
The Bank of Ghana’s framework appears calibrated to avoid recreating the conditions that necessitated the February 2025 emergency response. By maintaining sterilisation capacity and liquidity discipline, the central bank preserves flexibility to respond swiftly if external shocks or fiscal slippage threaten price stability. The recent appreciation of the cedi and accumulation of reserves provides buffers, yet the central bank recognises that maintaining confidence requires demonstrating sustained commitment to the inflation target.
Investors and business analysts have welcomed the gradual easing as evidence that Ghana’s macroeconomic stabilisation programme is progressing as designed, reducing uncertainty that constrained investment during the acute crisis period. The central bank’s explicit commitment to preserving liquidity discipline should reassure international markets that Ghana’s recovery trajectory remains credible and reversions to high inflation remain unlikely.
