A coordinated approach to fiscal and monetary policies is necessary to prevent external spillovers, as the Bank of Ghana believes the nation’s economic gains could face headwinds from global developments.
In its first meeting of 2025, the Bank’s Monetary Policy Committee (MPC) highlighted both domestic improvements and external risks that could disrupt the country’s economic stability.
The MPC warned that policy shifts in advanced economies – particularly the United States – could have significant implications for emerging markets like Ghana.
A stronger dollar could exert pressure on the cedi, increase import costs and pose inflationary risks – requiring a careful balancing act by policymakers.
The central bank stressed the importance of alignment between fiscal and monetary policy to mitigate these risks.
Inflation remains a critical concern for policymakers with the rate fluctuating throughout 2024. After peaking at 25.8 percent in March, it declined to 20.4 percent by August but ended the year at 23.8 percent – largely due to rising food prices.
The inflation rate for January 2025 stands at 23.5 percent, marking a slight decrease from 23.8 percent recorded in December 2024 according to the latest Consumer Price Index (CPI) report released by Ghana Statistical Service (GSS).
Food inflation remained a dominant factor, standing at 28.3 percent compared to 27.8 percent in December while non-food inflation was recorded at 19.2 percent compared to 20.3 percent in December.
Despite the inflation rate’s slight reduction from the previous month, concerns remain over persistent high prices of essential commodities. The Committee expects the disinflation process to resume, but emphasised that progress will depend on effective fiscal discipline from the new administration.
Complementary fiscal and monetary policies will therefore have to be carefully set to prevent spillovers into the Ghanaian economy. Global inflationary pressures have gradually eased over the period, which has led to easing of the monetary policy stance across several countries.
